CBI Auctions Accused of Encouraging Money Laundering

CBI Auctions Accused of Encouraging Money Laundering


Added by [You must be registered and logged in to see this link.] on April 29, 2013.
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Tags: [You must be registered and logged in to see this link.], [You must be registered and logged in to see this link.], [You must be registered and logged in to see this link.]Man inspects 25,000 Iraqi dinars
Hard currency auctions held daily by the Central Bank of Iraq are facing allegations of making money laundering more widespread, and potentially allowing dollars to be funnelled into Iran.
For nearly ten years, the CBI has held auctions each day, in which hard currency is sold to banks, companies and trading entities. Individuals are not permitted to participate, and any organisation that does want to be involved must have a $400,000 capital. Showing transaction and import receipts are the primary methods of exchange. Currently, $1 is sold for 1,118 Iraqi dinars, and all applications must go through three separate bodies: the money laundering division of the central bank, the economic crime unit, and the criminal division of the MOI.
The issue however, is that these measures have become so stringent, that purchases declined rapidly, and the CBI allowed a select few banks to directly sell dollars to Iraqi citizens. In theory, this would be for travel purposes, and the cap has been set at $5000 per month, but the demand has led to fraud.
With the exchange rate on the black market around $1 to 1,225 dinars, the purchase of dollars from the permitted private banks is in high demand. So much so, that there have been instances in which traders are renting out passports to allow people to buy more than their allocation.
Furthermore, there have been claims that the private banks are not always dealing directly with individuals. While the CBI won’t confirm evidence, it is suggested that some intermediaries are working with these banks for commission, and it is becoming increasingly lucrative.
The Central Bank themselves have admitted that their own strict measures have led to a fall in transactions, and therefore a lower exchange rate, but they have refused to comment on the possibility that they have instigated illegal activity and money laundering.
It’s certainly true that they are concerned about the black markets for currency trading, and the leaking of hard currency into Iran is another issue. Allowing these private banks to deal with individuals has decreased security, and when 3^rd party intermediaries are introduced, there is a real risk that dollars are leaving Iraq for Iran.
To conclude, it seems essential that the CBI reins in these problems quickly. They unquestionably need to feed US dollars into the economy, but also need to maintain a balance of security. Experts have asserted that the strict initial measures have restricted the market, and the subsequent lax selling has gone too far. If the currency is ever to reach a level where it is a candidate for [You must be registered and logged in to see this link.], forensic monitoring exchange within Iraq and beyond its borders is essential.


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