Fake import bills confused Iraq’s markets and prompted the Central Bank of Iraq to stop dealing with 14 local banks due to irregularities that it said took place last year “before the formation of the current government” and the imposition of US restrictions.
On Wednesday, the US Treasury imposed sanctions on 14 Iraqi banks in a crackdown on Iran’s dealings in dollars.
The Wall Street Journal quoted US officials as saying they were taking action against the Iraqi banks after uncovering information that they engaged in money laundering and fraudulent transactions, some of which may have involved sanctioned individuals and raised concerns that Iran could be benefitting from the dealings.
Despite the implementation of US restrictions on dollar sales in Iraq since the beginning of 2023, some parties, which are suspected of smuggling dollars to Iran and Syria, have managed to circumvent the strict controls imposed by Washington.
After the application of US restrictions, dollar sales from the central bank stabilized at about $150 million per day, which money experts believe represents the actual need of the local market. But those sales gradually escalated in the past two months to finally reach $270 million, which means, according to experts, that more than $100 million is smuggled to external parties.
It is likely that the concerned Iraqi banks were involved in smuggling operations, as they represent a cover for sanctioned entities and personalities.
The Central Bank of Iraq said in a press statement that banks, which are prohibited from making transactions in US dollars, enjoy full freedom in dealing in Iraqi dinars with various services within the Iraqi banking system, in addition to their right to international dealings in currencies other than the US dollar.
