Iraqi banks hit with dollar ban say they are ready to challenge measures

Iraqi banks hit with dollar ban say they are ready to challenge measures

Fourteen Iraqi private banks that were accused by the United States of helping to transfer U.S. dollars to Iran have expressed their readiness to challenge the imposed restrictions and undergo audits. They have also called on Iraqi authorities to provide assistance. Iraqi central bank officials have stated that last week, U.S. financial authorities prohibited these 14 banks from conducting dollar transactions as part of a broader crackdown on dollar smuggling to Iran through the Iraqi banking system. The U.S. State Department deputy spokesperson, Vedant Patel, clarified that these measures should not be referred to as sanctions, as stated by Iraq’s Central Bank governor. Patel explained that the Treasury Department and Federal Reserve Bank of New York had revoked the banks’ access to the Central Bank of Iraq’s foreign currency sale window, which includes the dollar and wire auctions. Patel further emphasized that these actions aim to limit the ability of individuals involved in money laundering, profiting from the exploitation of Iraqi funds, and evading U.S. sanctions. However, the U.S. Treasury Department and the New York Fed have not provided any comments regarding this matter.

On Wednesday, Iraqi central bank (CBI) Governor Ali al-Allaq stated that the institution is closely monitoring the situation and has no indication that the U.S. will impose additional “sanctions” on Iraqi banks. He also highlighted that other banks are capable of fulfilling the market’s requirements for dollar transactions, with the 14 targeted banks representing only 8% of external transfers. Although these banks have been banned from conducting dollar transactions, they can still utilize Iraqi dinars and other foreign currencies. Allaq clarified that the transactions leading to the U.S. restrictions occurred in 2022, before the CBI implemented stricter regulations on dollar transfers. These regulations now require applicants to use an online platform and provide comprehensive information about the end-recipients. These measures align with U.S. regulations aimed at preventing the illegal transfer of dollars to Iran and exerting pressure on Tehran through U.S. sanctions related to its nuclear program and other disputes.

Representing the 14 banks, Haider al-Shamma expressed concerns on Wednesday that the imposed sanctions could further weaken Iraq’s currency. The Iraqi dinar has already depreciated from under 1,500 dinars per U.S. dollar last week to 1,580 as of Wednesday. Iraq’s central bank attributes the dinar’s depreciation to merchants, including those involved in illegitimate financial transactions, who obtain currency from the black market instead of using the official platform. The recent U.S. measures, combined with previous restrictions on eight banks, have resulted in nearly one-third of Iraq’s 72 banks being blacklisted, according to two Iraqi central bank officials. Al-Shamma warned during a news conference that imposing sanctions on a third of Iraqi private banks regarding dollar transactions will not only negatively impact the value of the Iraqi dinar against the U.S. dollar but will also have significant consequences for foreign investments. He emphasized that these banks are independent financial institutions and have no involvement in political tensions.

Reporting by Ahmed Rasheed and Timour Azhari in Baghdad; Editing by Richard Chang and Daniel Wallis

About News Team

Hi, I'm Alex Perez, an experienced writer with a focus on lifestyle and culture news. From food and fashion to travel and entertainment, I love exploring the latest trends and sharing my insights with readers. I also have a strong interest in world news and business, and enjoy covering breaking stories and events.

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