The United States has taken decisive action in its efforts to curb the illegal transfer of U.S. currency to Iran by imposing a ban on 14 Iraqi banks from conducting dollar transactions, as per a report by the Wall Street Journal on July 19. The move, executed by the Treasury Department and the Federal Reserve Bank of New York, comes as part of a broader crackdown on financial activities that potentially benefit Iran and violate U.S. sanctions.
The Wall Street Journal cited U.S. officials who revealed that the Iraqi banks were found to be involved in money laundering and fraudulent transactions, some of which might have directly or indirectly benefited individuals under U.S. sanctions. This discovery raised concerns that the funds involved could ultimately find their way into the hands of sanctioned individuals.
"We have strong reason to suspect that at least some of these laundered funds could end up going to benefit either designated individuals or individuals who could be designated," a senior U.S. official stated.
The primary sanctions risk in Iraq is linked to Iran, and this crackdown aims to disrupt the flow of funds from Iraq to its neighboring country.
The list of banned Iraqi banks includes prominent financial institutions such as Al Mustashar Islamic Bank, Erbil Bank, World Islamic Bank, and Zain Iraq Islamic Bank. However, the Iraqi government has yet to respond to the ban, and the private banks association in Iraq did not immediately offer any comments regarding the matter.
Similarly, neither the U.S. Treasury Department nor the New York Federal Reserve provided immediate responses to requests for comment on the situation.
The sanctions imposed on Iran by the United States have made it difficult for the country to access billions of dollars in assets held in various countries. The measures have targeted Iran's financial activities in an effort to apply economic pressure on the country.
Additionally, Washington has been exerting pressure on Iraq, OPEC's second-largest oil producer, to strive for self-sufficiency and reduce its reliance on the U.S. dollar in transactions with Iran. This latest ban further emphasizes the U.S. stance on preventing any circumvention of sanctions, particularly in the oil-rich region.
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