Iraq ‘selling $300m a day’ before banking reforms

Banking reforms in Iraq have revealed fraudulent transactions worth up to $300 million a day, says Prime Minister Mohammed Shia Al Sudani.

The foreign currency transfers happened before the latest regulations were introduced, and while the dinar’s value fell, Mr Al Sudani said.

The new government has pushed through a new way of banking linked to the international electronic transfer system known as Swift.

After taking office last year, Mr Al Sudan’s cabinet promised to tackle corruption.

On Monday evening, he hailed “a real reform of the banking system” but denounced “falsified invoices, money going out fraudulently”, as foreign currency payments for imports.

“That is a reality,” he said on state television.

Banking reforms are aimed at allowing transparency, curbing money laundering and enforcing international sanctions.

An adviser to Mr Al Sudani said that since mid-November, Iraqi banks wanting to access dollar reserves in the US must use the system.

The US Federal Reserve then examines and blocks suspicious requests. According to the adviser, the US Fed had so far rejected 80 per cent of transactions.

Before the introduction of the new banking regulations, “we were selling $200 million or $300 million a day”, Mr Al Sudani said.

“Now, the central bank provides $30 million, $40 million, $50 million.

“What were we importing in a single day for $300 million?

“There are products that were entering [Iraq] for prices that make no sense. Clearly, the objective was to take foreign currency out of Iraq. This must stop.”

Money may have been moved “to neighbouring countries” through Iraqi Kurdistan, Mr Al Sudani said, without elaborating.

He said the controls were planned for two years and deplored failure to enact them.

Iraq, which is trying to move past four decades of instability, is plagued by corruption.

The official exchange rate is fixed at 1,470 dinars to the dollar, but the currency was trading unofficially at 1,680 on Tuesday.

Foreign Minister Fuad Hussein is scheduled to travel to the US next Tuesday to discuss the new regulations and exchange rate.