US sanctions confuse Iraqi banks: they affected the money market and the dinar

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[size=52]US sanctions confuse Iraqi banks: they affected the money market and the dinar[/size]

[size=45]Private Iraqi banks that were included in the US sanctions list are suffering from problems that have been reflected in their banking performance and cash transactions, which has directly affected the monetary market and commercial activity in a country that relies heavily on imports from abroad.[/size]
[size=45]The recent US sanctions on 28 banks, which were justified by the targeted Iraqi banks’ dealings with Iran and accusations of their involvement in dollar smuggling, led to several monetary transfers more than a month after they were banned by the US Treasury, which prompted the Central Bank of Iraq to prevent them from dealing in dollars. In addition to a number of other legal measures issued by the Central Bank in accordance with US Treasury instructions.[/size]
[size=45]At the beginning of last February, the Central Bank of Iraq issued a decision to include the names of the banned banks, which are the Assyria International Investment Bank, the Iraqi Investment Bank, the Iraqi Union Bank, the Kurdistan International Islamic Bank for Investment and Development, Al-Huda Bank, the South Islamic Bank for Investment and Finance, the Arab Islamic Bank, and the Islamic Bank of Iraq. Hammurabi Commercial Bank has been added to the list of Iraqi banks subject to sanctions, as part of the measures taken to reduce fraud, money laundering, and other illicit uses of the US currency, while allowing these banks to operate and conduct their cash transactions in other currencies.[/size]
[size=45]Damage to Iraqi banks[/size]
[size=45]The Association of Private Banks in Iraq warned of what it described as “great damage” to banks that were deprived of dealing in dollars, and the impact of sanctions on the Iraqi market.[/size]
[size=45]The association's advisor, Samir Al-Nusairi, said that the Iraqi economy and the banking sector in particular are facing many crises and challenges, represented by the sudden fluctuation in the prices of the Iraqi dinar against the dollar and the US sanctions on a number of Iraqi banks.[/size]
[size=45]Al-Nusairi stated that the Iraqi government and the Central Bank of Iraq have begun working on using many procedures in accordance with new standards and controls that contribute to organizing and financing foreign trade in directions that make the Iraqi banking sector comply with international banking standards.[/size]
[size=45]He pointed out that there are 28 banks that have been suspended from trading in the dollar at the level of international foreign transactions and transfers, and the deprivation of these banks is due to transactions in previous years, due to the presence of doubts and audit, administrative, and regulatory procedures.[/size]
[size=45]Al-Nusairi confirmed that these banks constitute 50 percent of the Iraqi private banking sector, which caused great damage to the sector. Because the total assets of the Iraqi banks that were punished and prohibited from dealing in dollars constitute approximately 47 percent, and the total of their deposits constitutes 36 percent, and the same is true for capital, which constitutes approximately 37 percent.[/size]
[size=45]He reported that there are more than 245 banking branches of these banks in Iraq, which constitute 51 percent of the number of banking branches operating in the country, while the number of employees working in the branches of these banks constitutes approximately 40 percent of the total number of employees in the sector.[/size]
[size=45]Sanctions fraud[/size]
[size=45]Specialists believe that the procedures for controlling the dollar are complex, and are still at their most intense through the Central Bank of Iraq’s daily dealings in selling the dollar through the currency selling window. The impact of the ban on these banks on the Iraqi market also increased, through an increase in the prices of basic materials, an increase in inflation rates and a decrease in the purchasing power of the Iraqi citizen, which caused a stagnation in the markets and a decline in the performance of the local market.[/size]
[size=45]The economic researcher, Omar Al-Halbousi, saw that the daily sales of the dollar by the Iraqi Central Bank are very high, and a large part of these sales are allocated for the purpose of import transfers, but the volume of transfers compared to the goods entering Iraq shows a very large difference, indicating the continued circumvention of sanctions and the leakage of dollars through... Multiple ways and means out of Iraq.[/size]
[size=45]Al-Halbousi stated that all private banks in Iraq do not have investment diversification, but rather rely on the currency selling window, and this indicates that they are not banks in the true sense, which is what made those punished banks suffer greatly, forcing them to lay off a large number of their workers and reduce wages. And abandoning the idea of ​​expanding by opening branches, stressing that some banks have reached the brink of collapse unless they merge with other banks or new investors enter.[/size]
[size=45]Al-Halbousi pointed out that there are a number of Iraqi banks that were included in the ban list that were able to adapt to the sanctions, through multiple means of dealing in cash in other international currencies, but this adaptation may be temporary. Regarding the situation of the sanctioned banks, Al-Halbousi explained that so far none of them have been closed, but rather they are still carrying out their work on a daily basis, relying on internal activity in the form of internal transfers, or some deposits and dealing in currencies other than the dollar, in addition to the endemic employees handing over their salaries, but they are witnessing a significant decline. In their banking performance, the basis of the work of these banks is the dollar from which they are banned.[/size]
[size=45]Al-Halbousi stressed that private banks in Iraq lack the meaning and true structure of solid banks, as they did not provide real financial and banking products and services, but rather relied on the window for selling foreign currency and remittances, and there was no contribution from them in financing projects or investment and development, until the situation reached this point. Exploiting government initiatives for the purpose of developing its own activities and increasing profits and capital.[/size]
[size=45]Performance of private banks[/size]
[size=45]In this context, the banking expert, Abdul Rahman Al-Sheikhli, pointed out that the banks against which the sanctions were issued stopped their banking operations in dollars only, and their business and external transactions were affected to a minimum, and they were limited to internal transactions in the Iraqi dinar, which affected the Iraqi economy and the local market. Al-Sheikhli stressed that Iraq depends almost entirely on import operations from abroad, and these operations are carried out through external financial transfers made by these banks, which were greatly affected and left negative repercussions on the price level in the local market.[/size]
[size=45]Al-Sheikhly pointed out that these banks’ dealing in financial transfers to countries that are not desired by America, and are registered on the list of international embargoes and economic sanctions, contributed to the issuance of the decision banning dealing in the dollar.[/size]
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