US Treasury’s top sanctions official in Iraq to meet PM as Washington takes action against bank

The US Treasury Department’s top sanctions official travelled to Baghdad on Sunday, a Treasury spokesperson said, as Washington seeks to counter Iran’s sanctions evasion in Iraq and bring the country’s financial sector in line with international standards.

Treasury’s Under Secretary for Terrorism and Financial Intelligence, Brian Nelson, travelled to Iraq from Sunday to Monday, where he met senior Iraqi officials, including Prime Minister Mohammed Shia al-Sudani, as part of continuing work on countering illicit finance, the spokesperson said.

While on the trip, Nelson and counterparts discussed protecting Iraqi and international financial systems from criminal, corrupt and terrorist actors, the spokesperson said, adding that Washington will continue to be a partner in protecting Iraq’s financial sector “from abuse by Iran or other malign actors”.

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The United States on Monday also identified Iraq’s Al-Huda Bank as a foreign financial institution of primary money laundering concern, accusing it of serving as a conduit for terrorist financing.

Alongside the finding, the Treasury’s Financial Crimes Enforcement Network proposed a rule that would sever the bank from the US financial system by prohibiting domestic financial institutions and agencies from opening or maintaining a correspondent account for or on behalf of the bank.

Washington also slapped sanctions on the bank’s owner.

“Al-Huda Bank and its foreign sponsors, including Iran and its proxy groups, divert funds that could otherwise support legitimate business and the economic aspirations of the Iraqi people,” the Treasury Department said in a statement.

“These bad actors fuel violence that threatens the stability of Iraq and the lives of SU and Iraqi citizens alike.”

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Nelson will travel to the United Arab Emirates, where Washington has also had concerns about sanctions evasion, after his visit to Iraq.

Nelson’s visit comes as the US seeks to crack down on a host of Iranian-backed proxies that have used Gaza, Iraq, Lebanon, Syria and Yemen to carry out attacks on Israeli, US and other interests.

The United States imposed sanctions last week on Hamas-affiliated financial exchanges in Gaza, an Iraqi airline and backers of Iranian-linked militias in Iraq, accusing all of working with Iran’s elite military and intelligence unit.

Assistant Secretary for Terrorist Financing and Financial Crimes Elizabeth Rosenberg travelled to Iraq in September, where she agreed with Iraqi counterparts to continue working toward reforms.

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Washington has called for Iraq to address continued risks of the misuse of dollars at Iraqi commercial banks, and in July barred 14 Iraqi banks from conducting dollar transactions as part of a wider crackdown on the illicit use of dollars.

With more than US$100 billion in reserves held in the US, Iraq is heavily reliant on Washington’s goodwill to ensure oil revenues and finances do not face US censure.

Iraq’s central bank governor has said Iraq is committed to implementing tighter financial regulations and combating the smuggling of dollars.

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