Iraq May Sanction More Banks For Smuggling Dollars

The new Trump administration is renewing its anti-Iran policy and focusing upon Iraq’s ties to Tehran. There are reports that several Iraqi banks may be sanctioned for smuggling dollars to Iran.

 

There have been several stories in the Iraqi press that 5 Iraqi banks may be banned from taking part in the Central Bank of Iraq’s dollar auctions. It’s believed that these businesses smuggle dollars they buy to Iran and Hezbollah. This will be at the behest of the United States that wants to crackdown upon Iran’s sanction busting efforts. Previously 8 banks were sanctioned.

 

The Central Bank sells dollars to businesses that import goods and to Iraqis going abroad. The process has been abused for years by the country’s ruling elite, Iran, Syria, Lebanon and the insurgency.

 

Al Hurra recently noted how the dollar auctions are manipulated. First inflated and fake invoices are filed with the Central Bank to buy dollars and then the money is transferred to Iran. For instance a company may need to buy $1 million worth of foreign goods but will ask for $4 million with the extra $3 million going to Tehran. Iran also prints counterfeit Iraqi dinars to buy dollars. Al Rafidain estimated that Tehran printed up to 50 trillion fake dinars for this purpose. Pro-Iran groups such as Hashd factions and political parties facilitate this business by using front companies to purchase U.S. currency. The fact that dollar auctions went from $41 billion total in 2023 to $81 billion in 2024 point to how much illegal activity is going on.

 

The problem with sanctioning banks is that it doesn’t work. Other banks can be used by Iran and its allies. More importantly the entire system is corrupt. Everyone knows there are fake receipts, counterfeit dinars, and front companies are being used. The U.S. has been trying to push reforms upon the system for years and there is little to show for the effort.

 

SOURCES

 

Freihat, Moaz, “Complex Networks” … How does Iran exploit the Iraqi financial system” Al Hurra, Al Hurrah, 2/7/25

 

The Insight International, “Iraq’s central bank to ban five local banks from US dollar transactions,” 2/17/25

 

Al Mada, “Washington threatens to impose sanctions on government financial facilities in Iraq,” 2/18/25

 

Al Rafidain, “Press reports: Iran printed 50 trillion counterfeit Iraqi dinars to buy dollars from the Iraqi market," 1/25/25