Iraq Suspends US Dollar Transactions for 8 Banks Over Fraud Concerns

Following a visit from a top US Department of Treasury official, eight commercial banks local to Iraq were banned by the Iraqi government on Sunday from making US dollar transactions due to concerns about fraud, money laundering, and other illegal activities.

The eight named financial institutions are restricted from participating in the Iraqi central bank’s daily dollar market.

The banks in question are 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.

The central bank noted, however, that these entities were still permitted to coordinate and transfer payments in other currencies.

As a close ally of both Iran and the US, Iraq’s heavy dependence on imports and revenue from oil exports makes the government particularly reliant on the approximately $100 billion it holds in reserves, and Iraqi regulators are evidently willing to work with the US on this administration’s campaign to curtail currency smuggling into nearby Iran.

“We commend the continued steps taken by the Central Bank of Iraq to protect the Iraqi financial system from abuse, which has led to legitimate Iraqi banks achieving international connectivity through correspondent banking relationships,” a US Treasury spokesperson said in a statement.

In July of last year, similar restrictions were levied at 14 other Iraqi banks.