US Treasury official urges CBI to address dollar misuse risks to avoid further sanctions

Shafaq News / A senior official from the US Department of the Treasury has stated that the Central Bank of Iraq (CBI) must address ongoing risks stemming from the misuse of the US dollar in Iraqi commercial banks to avoid further punitive measures targeting the country's financial sector. The official noted instances of fraud, money laundering, and Iran evading sanctions.

In July, the US barred 14 Iraqi banks from conducting transactions in dollars as part of a broader campaign against unlawful use of the US currency.

According to the official, there are still other Iraqi banks with risks that "need to be addressed" despite the campaign.

With reserves exceeding $100 billion in the US, Iraq heavily relies on Washington's goodwill to ensure its oil revenues and funds are not subjected to US sanctions.

The official added that the action taken by the US in July was based on clear indicators of illegal financial activity. Alleged crimes under investigation by the Treasury Department include money laundering, bribery, extortion, embezzlement, and fraud.

CBI's governor has stated that the country is committed to implementing stricter regulatory rules for the financial sector and combating dollar smuggling. CBI did not immediately respond to a request for comment on Thursday.

Iraq has over 70 private banks, a relatively new development in a sector that was almost entirely state-dominated until the fall of Saddam Hussein following the U.S. invasion in 2003. Among these banks, slightly less than a third are on the US blacklist.

The official told Reuters in Baghdad, "I chose to focus on the banks that still have access, and I see that the risks are ongoing there."

He added, "It would be great if CBI seized the opportunity to address the matter directly, which might negate the need for further actions [in the US]."