In a recent interview, Iraq’s Prime Minister Mohammed Shia Al-Sudani announced that recent banking regulations have uncovered fraudulent dollar transactions made from Iraq. The new regulations coincide with a drop in the value of the local currency and aim to increase transparency, combat money laundering and enforce international sanctions in the country.
Adoption of the international electronic transfer system known as SWIFT was supposed to help in this regard. Since mid-November, Iraqi banks wanting to access dollar reserves stored in the US must make transfers through this system. The US Federal Reserve then examines the requests and blocks them if found suspicious. According to an adviser to the Prime Minister, the Fed has rejected 80% of the transfer requests so far.
Prime Minister Al-Sudani also spoke about the drop in the value of the local currency, pointing out that the central bank was now providing much less dollars compared to before the introduction of the new regulations. He questioned the large amount of money being spent on imports and hinted at the possibility of money being transported to Iraq’s Kurdistan province and then to neighboring countries.
The Prime Minister stated that the new controls were planned for two years in accordance with an agreement between Iraq’s central bank and US financial authorities and expressed disappointment over the previous failure to implement them. A delegation including the Foreign Minister and the new central bank chief will travel to Washington on February 7 to discuss the new mechanism and the fluctuating exchange rate.
With an ongoing effort to move past four decades of war and unrest, Iraq remains plagued by corruption and the recent drop in the value of the local currency has sparked protests among citizens concerned about their purchasing power.
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