BAGHDAD: Iraq has barred eight local commercial banks from conducting US dollar transactions, taking action to reduce money laundering and other illegal uses of US currency, days after a visit by a top US Treasury official to the country.
The banks are stopped from accessing the central bank’s daily dollar auction, a main source of hard currency in the country that has become a key point of a US crackdown on currency smuggling to Iran.
Iraq, with more than $100 billion in reserves held in the US, depends heavily on Washington’s goodwill to ensure that its access to oil revenues and finances are not stopped.
According to a central bank document, 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 are included in the list.
A US Treasury spokesman commended the steps taken by the Central Bank of Iraq to protect the Iraqi financial system from being misused, that has led to legitimate Iraqi banks achieving global connectivity through correspondent banking ties.
In July 2023, Iraq barred 14 banks from carrying out g dollar transactions as part of a crackdown on dollar smuggling to Iran via the Iraqi banking mechanism.
According to Iraqi and US officials the decision came after a request from Washington.
The US Treasury Department’s top sanctions official, Brian Nelson, last week met top Iraqi officials in Baghdad and discussed how to protect the Iraqi and global financial systems from criminal practices.
