ALBAWABA – Several private Iraqi banks hit by United States (US) dollar ban under US sanctions said last week they were ready to challenge the measures and face the impending audits, news agencies reported.
A total of 14 Iraqi banks were sanctioned last week for allegedly helping siphon US dollars to Iran. They were barred from conducting dollar transactions as part of a wider crackdown on dollar smuggling to Iran, according to Iraqi central bank officials.
The sanctioned Iraqi banks have also called on the Iraqi authorities to provide assistance, stating they were ready to face the audits to come, Reuters reported.
US State Department deputy spokesperson Vedant Patel said these measures were not sanctions, as they have been referred to by Iraq's Central Bank governor.
Patel said the Treasury Department and Federal Reserve Bank of New York earlier this month removed the Iraqi banks' access to the Central Bank of Iraq's foreign currency sale window, according to Reuters.
"These actions help limit the ability of bad actors seeking to launder US dollars, profit from the exploitation of money owned by the Iraqi people, and evade US sanctions," Patel said on Thursday.
Reuters tried to get comments from the US Treasury Department and the New York Fed, but to no avail.
Impact of barring 14 Iraq banks from US dollar transactions
Iraqi central bank (CBI) Governor Ali al-Allaq said on Wednesday the institution was following up on the issue and he had no indication the US would impose "sanctions" on more Iraqi banks.
He also noted that other banks were able to cover the market's needs for dollar transactions, with the 14 targeted banks representing just 8 percent of external transfers.
The 14 banks have been banned from undertaking dollar transactions but can continue to use Iraqi dinars and other foreign currencies, the Canada-based news agency said.
Haider al-Shamma, speaking on behalf of the 14 Iraqi banks, said on Wednesday the sanctions could further weaken Iraq's currency.
Notably, the Iraqi dinar fell from just under 1,500 dinars per US dollar last week to 1,580 as of Wednesday.
The latest US measures, along with previous curbs on eight banks, have left nearly a third of Iraq's 72 banks blacklisted, two unnamed Iraqi central bank officials told Reuters.
"Forcing sanctions on a third of the Iraqi private banks from conducting dollar transactions will have negative consequences not only on the value of the Iraqi dinar against the US dollar, but it will have a very big impact on foreign investments," al-Shamma said during a news conference on Wednesday.
"Our banks have nothing to do with political tensions, but are independent financial institutions."
