Emmanuel OchayiIn a move aimed at combating fraud and money laundering, Iraq has taken the unprecedented step of barring eight local banks from engaging in U.S. dollar transactions.
The decision comes in the wake of a recent visit by a key U.S. Treasury official, Brian Nelson, who met with top Iraqi authorities to discuss safeguarding financial systems from terrorist, criminal, and corrupt activities.
Join our WhatsApp ChannelThe banned banks, including Kurdistan International Islamic Bank and Investment Bank of Iraq, are now excluded from participating in the daily dollar auction orchestrated by the Iraqi central bank.
This auction serves as the primary source of hard currency for the import-dependent nation, making Iraq a crucial ally in the American campaign against money smuggling into Iran.
A validated central bank document singled out the affected banks, including the likes of Al Huda Bank and Arabia Islamic Bank. Despite numerous attempts to seek comments from Ashur, Hammurabi, and the chairman of the private bank association overseeing the implicated banks, responses were not immediately available.
The U.S. Treasury, in response to Iraq’s decision, expressed commendation for the Central Bank of Iraq’s efforts to protect its financial system.
This move aligns with a broader initiative that saw 14 banks prohibited from dollar transactions in July 2023, following a joint decision between U.S. and Iraqi officials, with Washington pushing for enhanced measures to curb the flow of dollars into Iran.
While the Treasury acknowledged the prohibited banks can still operate in other currencies, the recent sanctions against Al-Huda Bank underscored the ongoing challenges. Allegedly transferring billions of dollars to Iran-supported organizations, Al-Huda Bank faced consequences during Nelson’s visit.
The complex dynamics between Iraq, the U.S., and Iran continue to evolve, with Washington urging Iraq to play a more active role in countering Iran-backed armed factions. Despite these challenges, the collaboration between Iraqi Prime Minister Mohammed Shia al-Sudani and Western authorities has been praised for implementing reforms that align Iraq’s economy with global norms and limit Iran’s access to U.S. cash.
Emmanuel Ochayi is a journalist. He is a graduate of the University of Lagos, School of first choice and the nations pride. Emmanuel is keen on exploring writing angles in different areas, including Business, climate change, politics, Education, and others.
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