On Thursday, the Central Bank of Iraq released a statement clarifying the recent ban on some Iraqi banks from conducting transactions in US dollars. This ban was imposed after the US Treasury Department placed sanctions on 14 Iraqi banks.
According to a statement by the bank, Iraqi banks have been prevented from dealing in US dollars due to a review of bank transfers from the previous year (2022). This was before the implementation of an electronic platform and the current government. However, banks that cannot deal in US dollars are still able to conduct transactions in Iraqi dinars within the Iraqi banking system. They also have the freedom to engage in international dealings using currencies other than the US dollar.
According to the statement, the electronic platform used for external transfers guarantees the safety and accuracy of all transfer transactions. It is in compliance with international standards, practices, and laws related to anti-money laundering and anti-terrorist financing. The system has received recognition and praise from the US Federal Bank, US Treasury, and other international financial institutions. These parties have provided high coordination and support for the system, which has also been audited by an accredited international auditor.
He stated that the Central Bank of Iraq has made significant progress in expanding transfer channels and approving correspondent banks. This has made transfers more accessible and secure. With the increasing number of local banks that provide this service, all transfer requests can be fulfilled. Additionally, the Central Bank of Iraq has no restrictions or ceilings on covering transfer requests, as long as they involve legitimate operations. It is worth noting that the requests from banks banned from using the dollar constitute only 8% of the total external transfers.
According to the statement, the exchange rate in the market is established using cash dollars provided by the Central Bank of Iraq to fulfill citizens’ requests for travel and other needs. However, some individuals, such as merchants, withdraw dollars for trading or other purposes outside of this platform, which can cause a rise in the exchange rate on the black market. It’s important to note that this black market is not a parallel market, as the source of the dollar is still the central bank and not from within the market. This situation can occur due to the citizens’ demand for the national currency.
The statement recommends that the government create a system to connect imports and verify a legitimate financial transaction to prevent the use of illegal methods to pay for them. This will alleviate the pressure on the dollar and prevent manipulation and smuggling of imports.