The Central Iraq will prevent 5 local banks from dealing with dollars economy

Two sources familiar with Reuters said on Sunday that the Central Bank of Iraq will prohibit 5 other local banks dealing in dollars, in a move that comes after meetings with officials from the US Treasury in the context of efforts to combat money laundering, smuggling the dollar and other violations.

One of the exporters said that the move comes after the meetings held in Dubai last week between officials from the Central Bank of Iraq, which had already banned 8 banks to deal in dollars, and officials from the US Treasury and the Federal Reserve (US Central Bank).

Iraq is one of the rare allies of the United States and Iran and has reserves estimated at more than $ 100 billion in America and depends greatly on Washington’s cooperation in ensuring that it does not hinder its access to oil returns and financial resources.

But Iraq, the second largest producer in the Organization of Petroleum Exporting Countries (OPEC), may find itself in a great dilemma after US President Donald Trump said this month that he would resume a “maximum pressure” policy towards Iran.

Iran views its neighbor and ally, Iraq as an economic “outlet”, and has great influence there through the strong factions and parties that support it. You also get the hard currency from Iraq through exports and avoid sanctions
American through his banking system.

Reuters revealed in December that a advanced network of diesel fuel smuggling, which generates at least one billion dollars annually to Iran, has flourished in Iraq since Prime Minister Muhammad Shi’a Al -Sudani took office in 2022.

The Central Bank of Iraq said that the banned banks from dealing with dollars are allowed to continue their work and conduct transactions for other currencies.

But this step limits the ability of banks to perform transactions in dollars, which hinders most of the operations that take place outside Iraq.

Western officials praised the cooperation with the Iraqi Prime Minister to implement economic and financial reforms. But pressure is expected to increase under the Trump administration.

The five banks are:

• Arab Islamic Mashreq Bank
• The United Bank for Investment
• Islamic Sinam Bank
• Misk Islamic Bank
• The Secretary of Iraq Bank for Islamic Investment and Finance.

In February 2024, the Central of Iraq issued a document that included the names of 8 banks prohibited from dealing with dollars, namely:

• Ashur International Investment Bank
• Iraqi Investment Bank
• Iraqi Federation Bank
• Kurdistan International Islamic Bank for Investment and Development
• Al -Huda Bank
• South Islamic Bank for Investment and Finance
• Arab Islamic Bank
• Hammurabi Commercial Bank.