It has been reported that Iraqi individuals and companies linked to Iran are actually indulging in the illegal movement of cash out of the country. This is being done to ‘avoid financial sanctions imposed by the US Treasury’. This has happened, despite Iraq’s Central Bank being denied any technical access to the US dollar.
The smuggling of currency is happening by exploiting the Iraqi Bank’s rules itself, where middlemen are picking auctioned hard currency and converting Iraqi dinars into dollars. The collected funds are then being transferred out of Iraq using private exchange offices.
It is very recent that the US Treasury’s Office of Foreign Assets Control had to impose financial sanctions on groups and individuals including two commanders of pro-Iranian paramilitary groups and two former governors supported by Iran. The sanctions were imposed under the Global Magnitsky Human Rights Accountability Act, targeting “perpetrators of serious human rights abuses and corruption,” and banned any financial dealings with those named.
As a consequence, the Central Bank of Iraq then issued a circular to all Iraqi banks ordering them to freeze the accounts of anyone targeted by sanctions and prevent their access to funds.
Traders in the Shorja market could justify the surge in cash as a blessing because there has been an evident shortage of it since the end of last year. Money laundering is not new to the politicians and influential in the circuit. Many have transferred and converted their assets to currency and send it to accounts outside Iraq.
But the levy of sanctions has brought the whole corruption ring to the grinding halt till they can find other means to continue to move currency around, without coming to the scrutiny of the US Treasury Department.