Iraq has banned eight local commercial banks from engaging in US dollar transactions, taking action to reduce fraud, money laundering and other illegal uses of US currency days after a visit by a top US Treasury official.
The banks are banned from accessing the Iraqi central bank’s daily dollar auction, a main source of hard currency in the import-dependent country that has become a focal point of a US crackdown on currency smuggling to neighboring Iran.
A rare ally of both the United States and Iran with more than $100 billion in reserves held in the US, Iraq relies heavily on Washington’s goodwill to ensure that its access to oil revenues and finances are not blocked.
In July 2023, Iraq banned 14 banks from conducting dollar transactions as part of a wider crackdown on dollar smuggling to Iran via the Iraqi banking system. The decision came after a request from Washington, according to Iraqi and US officials.
