The Cradle | July 20, 2023

The US Treasury Department and the Federal Reserve Bank of New York have barred 14 Iraqi banks from conducting transactions in US dollars as part of a sweeping crackdown to stop Iran and other sanctioned nations from acquiring the greenback, the Wall Street Journal (WSJ) reported on 19 July.

US officials say the new sanctions were issued after discovering information showing the banks engaged in money laundering and fraudulent transactions, some of which may have involved sanctioned individuals and raised concerns that Iran could benefit.

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 US official told the WSJ.

The banks targeted by the punitive measures are small institutions reportedly heavily involved in US dollar transactions.

According to Iraqs Shafaq News, the targeted banks include the Islamic Advisor for Investment and Finance, the Islamic Qartas for Investment and Finance, Al Mustashar Islamic Bank, Elaf Bank, Erbil Bank, the International Islamic Bank, Trans-Iraq Bank, Mosul Bank, Al-Rajeh Bank, Sumer Commercial Bank, Trust International Islamic Bank, the World Islamic Bank, and Zain Iraq Islamic Bank.

The sanctions came only one day after the US State Department issued a new 120-day sanctions waiver to allow Baghdad to deposit payments for Iranian natural gas into non-Iraqi banks in response to criticism that the White House is responsible for recent power cuts at the height of Iraqs blistering hot summer.

Since 2003, all Iraqi oil revenues have been paid into an account with the US Federal Reserve. Although Iraqis formed a sovereign government after the US invasion and occupation of their state, Iraq is still restricted from opening accounts for its oil earnings outside the US.

Given its dominance of the global financial system, Washington can control all funds of Iraq...