Five Iraqi Banks to be Banned from Dollar Transactions

Iraq’s central bank will ban five more local banks from dealing in dollars, two sources familiar with the matter told Reuters, in a move that follows meetings with U.S. Treasury officials as part of efforts to combat money laundering, dollar smuggling and other violations.

The move follows meetings in Dubai last week between officials from the Iraqi central bank, which last year already banned eight banks from dealing in dollars, and officials from the U.S. Treasury and the Federal Reserve, one of the sources said.

The five banks are Arab Mashreq Islamic Bank, United Investment Bank, Al-Sanam Islamic Bank, Misk Islamic Bank and Amin Al-Iraq Bank for Islamic Investment and Finance. The Iraqi central bank did not immediately respond to a request for comment.

Iraq has more than $100 billion in reserves in the United States and relies heavily on Washington’s cooperation to ensure its access to oil revenues and financial resources is not hindered.

The Iraqi central bank has previously said that banks banned from dealing in dollars are allowed to continue operating and conduct transactions in other currencies.

But the move limits banks’ ability to conduct dollar transactions, hampering most operations outside Iraq.

Western officials have praised the Iraqi prime minister’s cooperation on economic and financial reforms aimed at limiting Iran and its allies’ access to U.S. markets, but pressure is expected to mount under the Trump administration.