Iraq has taken action to ban eight local commercial banks from engaging in U.S. dollar transactions, citing the need to combat fraud, money laundering, and other illicit uses of U.S. currency. This move follows a recent visit by a top U.S. Treasury official. The prohibited banks are now restricted from participating in the Iraqi central bank’s daily dollar auction, a crucial source of hard currency for the country heavily reliant on imports. Iraq, with substantial reserves exceeding $100 billion held in the U.S., depends on maintaining favorable relations with the U.S. to ensure access to oil revenues. The banks facing this ban include 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. This move aligns with the broader U.S. efforts to crack down on currency smuggling to Iran through the Iraqi banking system. Notably, banned banks are still allowed to operate and conduct transactions in other currencies, as specified by the central bank’s regulations. The decision emphasizes Iraq’s cooperation in countering illicit financial activities and aligns with its commitment to international standards in financial and economic reforms.
