Economic Indicators

Iraq bans 8 local banks from US dollar transactions

2024.02.04 11:11


© Reuters. FILE PHOTO: An Iraqi man walks previous the headquarters of the Central Bank of Iraq in Baghdad, Iraq August 15, 2023. REUTERS/Ahmed Saad/File Photo

By Timour Azhari

BAGHDAD (Reuters) – Iraq has banned eight local business banks from partaking in U.S. dollar transactions, taking motion to cut back fraud, cash laundering and different unlawful makes use of of U.S. forex days after a go to by a high U.S. Treasury official.

The banks are banned from accessing the Iraqi central financial institution’s every day dollar public sale, a essential supply of arduous forex within the import-dependent nation that has turn out to be a focus of a U.S. crackdown on forex smuggling to neighbouring Iran.

A uncommon ally of each the United States and Iran with greater than $100 billion in reserves held within the U.S., Iraq depends closely on Washington’s goodwill to make sure that its entry to grease revenues and funds are usually not blocked.

A central financial institution doc verified by an official on the financial institution listed the banned banks.

They are: Ahsur International Bank for Investment; Investment Bank of Iraq; Union Bank of Iraq; Kurdistan International Islamic Bank for Investment and Development; Al Huda Bank; Al Janoob Islamic Bank for Investment and Finance; Arabia Islamic Bank and Hammurabi Commercial Bank.

The head of Iraq’s personal financial institution affiliation, which represents the banks concerned, and Ashur and Hammurabi didn’t instantly reply to requests for remark. Reuters is contacting the opposite banks.

A Treasury spokesman mentioned: “We commend the continued steps taken by the Central Bank of Iraq to guard the Iraqi monetary system from abuse, which has led to reputable Iraqi banks reaching worldwide connectivity by means of corespondent banking relationships.”

In July 2023, Iraq banned 14 banks from conducting dollar transactions as a part of a wider crackdown on dollar smuggling to Iran by way of the Iraqi banking system. The resolution got here after a request from Washington, in line with Iraqi and U.S. officers.

Banks banned from dollar transactions are allowed to proceed working and are allowed to have interaction in transactions in different currencies, the central financial institution says.

The U.S. Treasury Department’s high sanctions official, Brian Nelson, final week met high Iraqi officers in Baghdad, discussing methods to shield the Iraqi and worldwide monetary programs from felony, corrupt and terrorist actors.

Treasury introduced motion towards Al-Huda Bank through the go to, saying it was concerned in diverting billions of U.S. {dollars} to Iranian-backed teams.

A senior Treasury official informed Reuters that Washington anticipated Iraq to do extra to assist counter Iran-backed armed teams working out of Iraq after the killing of three U.S. troopers that has been blamed on hardline Iraqi factions.

The present Iraqi authorities got here to energy with the help of highly effective, Iran-backed events and armed teams with pursuits in Iraq’s extremely casual economic system, together with the monetary sector lengthy seen as a money-laundering scorching spot.

Still, Western officers have lauded cooperation with Iraqi Prime Minister Mohammed Shia al-Sudani in the direction of finishing up financial and monetary reforms meant to curb the power of Iran and its allies to entry U.S. {dollars}, and to deliver the Iraqi economic system into line with worldwide requirements.

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