In Baghdad, advertisement is rife for private banks safeguarded by concrete walls and security detail. But it is hard to find a single customer using these banks for any financial transactions. These newly formed institutions hide part of a complex financial “cartel” for smuggling and money laundering.
On February 17, Moqtada al-Sadr, an influential Shia scholar who leads the Sadrist Movement in Iraq, called for holding shady banks accountable for their involvement in currency smuggling and bill fraud.
It is difficult to be sure whether Sadr’s demands will be sufficient for dismantling one of the largest cohesive groups for financial manipulation in the region, especially since political parties and armed factions back it.
Nevertheless, Sadr’s move was a reminder to opponents that he does not receive political blows from opponents of the majority coalition without a response.
Little information is available about the nature of this cartel, who’s backing it and how it operates to achieve profits estimated at millions of dollars from smuggling and counterfeiting operations.
However, reliable sources say that this type of operation has escalated and taken an organized form after Washington imposed sanctions on Iran.
The lack of documented information against this cartel can be traced to fears of being assassinated for revealing the group’s secrets.
But scattered pieces of information, which were leaked over the past four years, show an initial picture of how this cartel operates and its association with local political and armed groups and the Iranian Revolutionary Guard.
In the past years, Iraqi militias have established fake banks and companies that buy dollars from the official currency market with forged invoices and correspondences.
As sources of information intersect, it is estimated that more than $500 million are drained daily from the Iraqi market by these illicit financial operations.
These funds are linked to bank accounts established after the US sanctions in the capitals of Syria, Lebanon and Tehran, a senior official who requested anonymity told Asharq Al-Awsat.
Former Iraqi lawmakers note that the funds not only helped Iran ease the impact of US sanctions, but also financed strife in the region’s countries. They funded internal conflicts that erupted in the past five years.
The Iraqi government’s recent recommendation for international bodies to reduce the value of the Iraqi dinar has upset the Iranians because it will have to spend more local currency and hold different import transactions to obtain dollars from Iraq.
