Shafaq News/ On Saturday, the U.S. Department of the Treasury revealed details about the meeting between the Iraqi and the American delegations in Turkiye to discuss financial issues.

"Under Secretary of the Treasury for Terrorism and Financial Intelligence Brian E. Nelson met with Central Bank of Iraq Governor Ali al-Allaq in Istanbul on February 3rd to discuss banking sector reforms and a mutual commitment to anti-money laundering and countering the financing of terrorism (AML/CFT) measures." The Treasury's readout said.

Under Secretary Nelson welcomed Governor Allaq's leadership on these issues, noting the longstanding collaboration and partnership between the Treasury Department and the Central Bank of Iraq, particularly restricting illicit and corrupt actors from exploiting the international financial system. The readout added.

"Under Secretary Nelson acknowledged Iraq's steadfast dedication to improving AML/CFT compliance standards and offered continued cooperation in modernizing the banking sector."

It is worth mentioning that the United States has restricted Iraq's access to its dollars, trying to stamp out what Iraqi officials describe as rampant money laundering that benefits Iran and Syria.

The exchange rate for the Iraqi dinar has jumped to around 1,750 to the dollar at street exchanges, compared to the official rate of 1,460 dinars to the dollar.

Since the 2003 invasion, Iraq's foreign currency reserves have been housed at the United States Federal Reserve, giving the Americans significant control over Iraq's supply of dollars. The Central Bank of Iraq requests dollars from the Fed and then sells them to commercial banks and exchange houses at the official exchange rate through a mechanism known as the "dollar auction."

In the past, daily sales through the auction often exceeded $200 million per day.

Ostensibly, most of the dollars sold in the auction are meant to go to purchases of imported goods from Iraqi companies. Still, the system has long been porous and easily abused, multiple Iraqi banking and political officials told The Associated Press.

U.S. officials confirmed to the A.P. that they suspected the system was used for money laundering but declined to comment in detail on the allegations or the new restrictions.

For years, large quantities of dollars were transferred out of the country to Turkey, the United Arab Emirates, Jordan, and Lebanon through "gray market trading, using fake invoices for overpriced items," a financial adviser to the Iraqi prime minister said to A.P., speaking on condition of anonymity because he was not authorized to discuss the matter publicly.

He said that the inflated invoices were used to launder dollars, with most of them sent to Iran and Syria, which are under U.S. sanctions, leading to complaints from American officials.