A US law firm said an independent investigation it recently conducted found no evidence linking Iraq’s prime minister-designate, Ali al-Zaidi, to financial activities tied to Iran’s Revolutionary Guards, adding that restrictions imposed on him in 2024 were due to reputational risks, not proven involvement in money laundering.
The clarification comes as al-Zaidi’s surprise designation to form a government in Baghdad, succeeding Mohammed Shia al-Sudani, faces political scrutiny over his background, after a bank he owns was included in restrictions by the Central Bank of Iraq on access to US dollars, as part of what was described at the time as a campaign to combat illicit financial flows.
Representatives of K2 Integrity, who asked not to be named because they are not authorized to speak publicly, said an independent probe by the firm found no credible evidence linking al-Zaidi or Al-Janoob Islamic Bank to the Quds Force and did not identify direct financial transfers from the bank to regional entities classified as high risk.
One representative told Asharq Al-Awsat that the restriction recommended by the US Treasury and the New York Federal Reserve on Al-Janoob Islamic Bank was limited to US dollar transactions and was driven by reputational concerns and the bank’s ownership, rather than confirmed violations related to money laundering or financing Iran-linked entities.
Al-Zaidi, a businessman who owns companies with his brother and partners, including Al-Oweis, Al-Janoob, and Dijlah TV, is seen as an opaque figure in Iraq’s political landscape.
His designation came amid public US opposition that led to Nouri al-Maliki’s exclusion from the race, while unannounced objections were also reported to have sidelined al-Sudani.
Restrictions linked to Iran
In February 2024, Iraq imposed restrictions on eight local banks, including Al-Janoob Islamic Bank, preventing them from accessing US dollars through the central bank window. The move was part of Washington’s efforts to curb money transfers to Iran.
A US Treasury spokesperson said at the time the measures aimed to protect Iraq’s financial system from abuse, citing concerns that US currency could be used in illegal activities.
The case highlights the ongoing challenge facing Baghdad in balancing its ties with both the United States and Iran, given its heavy reliance on the US dollar. Iraq receives about $10 billion in cash annually from the Federal Reserve, according to official estimates.
The US Embassy in Baghdad welcomed al-Zaidi’s designation, expressing support for efforts to form a government that reflects the aspirations of the Iraqi people. This follows months of political deadlock and comes amid pressure from the administration of Donald Trump, which had threatened to cut support to Iraq if al-Maliki returned to power.
Al-Zaidi faces a 30-day deadline to form a government, amid sharp divisions within the Coordination Framework and as regional tensions escalate following military strikes on Iran in February 2026 and subsequent attacks by armed groups on US interests in Iraq.
