Iraq has imposed a ban on eight local commercial banks from engaging in US dollar transactions. The move comes after a recent visit by a top US Treasury official and targets banks involved in the countrys daily dollar auction, a primary source of hard currency for Iraqs import-dependent economy. The ban underscores the broader US crackdown on currency smuggling to neighboring Iran.A central bank document, verified by an official, identified the banned banks: 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.Iraqs dependency on USIraq, an ally of both the United States and Iran, boasting over $100 billion in reserves held in the US, heavily relies on Washingtons goodwill to ensure uninterrupted access to oil revenues and financial resources.The head of Iraqs private bank association, representing the affected banks, and Ashur and Hammurabi, did not immediately respond to requests for comment. At the moment, other banks havent released any statements. The media reports quoted the spokesman of the Treasury, who commended the Central Bank of Iraqs efforts to safeguard the financial system, acknowledging the steps taken to enhance international connectivity for legitimate Iraqi banks through correspondent banking relationships.Iraq bans 14 banks from conducting dollar transactions This move follows a similar action in July 2023 when Iraq banned 14 banks from conducting dollar transactions in a broader initiative against dollar smuggling to Iran via the Iraqi banking system. The decision was made in response to a request from Washington, according to Iraqi and US officials.Banks prohibited from dollar transactions are still permitted to operate and engage in transactions using other currencies, as per the central banks statement.During a recent visit by the US Treasury Departments top sanctions official, Brian Nelson, actions were announced against Al-Huda Bank. It was implicated in diverting billions of US dollars to Iranian-backed groups. Washington expects Iraq to take additional measures to counter Iran-backed armed groups operating within its borders, following the killing of three US soldiers attributed to hardline Iraqi factions.Despite the current Iraqi governments ties to powerful, Iran-backed parties and armed groups, international cooperation has been acknowledged, particularly with Prime Minister Mohammed Shia al-Sudani, in implementing economic and financial reforms.
