ERBIL, Kurdistan Region - Iraq and the United States will form a team to review the violations committed by Iraqi banks sanctioned by the US Treasury Department and take corrective action, the governor of the Iraqi central bank told state media on Thursday.
"The issue of the US Treasury Department's sanctions on Iraqi banks was discussed during Prime Minister Mohammed Shiaa Al-Sudani's visit to Washington,” Ali Mohsen al-Alaq, Governor of the Central Bank of Iraq (CBI), told state media INA.
Alaq said that both Washington and Baghdad agreed to form a team consisting of representatives of the CBI, the US Treasury, and the US Federal Reserve Bank to conduct a review of “reports from various auditing sources to identify the nature of each violation of the banks and determine the corrective action required for the banks to be in a sound and proper condition.”
The CBI governor is part of a delegation to Washington DC headed by Prime Minister Sudani in what marks his first official visit to the US as prime minister of Iraq. Since arriving in the US on Saturday, Sudani has met with several high-level American officials, including US President Joe Biden.
The US banned transactions with 14 Iraqi banks for allegedly violating its rules in July last year. In January, Washington identified Iraq-based al-Huda Bank “as a foreign financial institution of primary money laundering concern,” and imposed sanctions on its owner Hamad al-Moussawi, who is also a member of the Iraqi parliament.
The US Treasury claimed that al-Huda Bank has been “controlled and operated” by Iran’s Islamic Revolutionary Guard Corps (IRGC) and the IRGC’s Quds Force, noting that “after establishing the bank, the Al-Huda Bank chairman began money laundering operations on behalf of the IRGC-QF and Kata’ib Hizballah.”
The CBI later announced that al-Huda Bank would continue “to provide its banking services without dealing in U.S. dollars and allowing transactions in other foreign currencies.”
The sanctions came at a time when US interests across Iraq and Syria were the target of drone strikes from IRGC-backed militia groups. The group has claimed its attacks constitute a response to Washington’s support for Israel in its war in the Gaza Strip.
In March, Alaq stated that the US had agreed to review sanctions on Iraqi banks adding that in the future similar punitive measures will be taken in consultation with Baghdad.
“It was agreed [by the US] to review the sanctions imposed on Iraqi banks, and that in the future such decisions should not be taken without discussing them with and informing the Central Bank of Iraq,” said Alaq.
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