Iraqis linked to Iran use money-laundering scam to beat US sanctions

Iraqis linked to Iran use money-laundering scam to beat US sanctions
A vendor inspects Iranian rials at a currency exchange shop in Baghdad, Iraq August 8, 2018. (Reuters)
Updated 01 August 2019

Iraqis linked to Iran use money-laundering scam to beat US sanctions

Iraqis linked to Iran use money-laundering scam to beat US sanctions
  • They employ middlemen to buy US dollars and transfer funds out of country
  • Rate of dollar purchases surged after sanctions imposed, exchange dealers tell Arab News

 

BAGHDAD: Iraqi individuals and companies linked to Iran are smuggling cash out of the country to avoid financial sanctions imposed by the US Treasury.

Despite technically being denied access to US dollars by Iraq’s central bank, they are exploiting the bank’s daily auction of hard currency by employing middlemen to convert Iraqi dinars into dollars. The funds are then transferred out of Iraq using private exchange offices.

“In previous months, the daily release rate of the dollar at the currency auction was between $150 million and $180 million, sometimes up to $200 million. In the past few days it has reached $270 million,” the owner of a large currency exchange and financial transfer office in Baghdad told Arab News.

There is “no noticeable justification” for the sudden increase in dollar purchases, exchange operators said. Traders at Shorja Market, the largest wholesale market in Baghdad, told Arab News the surge in remittances could not be explained by any changes in the market, where there had been a shortage of hard cash since the end of last year.

Daily buying and selling remained weak, they said. One prominent banker told Arab News:

“Traders have nothing to do with this fever; 80 percent of the remittances that were made this week were cash transfers, and will be delivered by hand.”

On July 18, the US Treasury’s Office of Foreign Assets Control imposed financial sanctions on groups and individuals including two commanders of pro-Iranian paramilitary groups and two former governors supported by Iran. The sanctions were imposed under the Global Magnitsky Human Rights Accountability Act, targeting “perpetrators of serious human rights abuses and corruption,”and banned any financial dealings with those named.

In response, the Central Bank of Iraq issued a circular to all Iraqi banks ordering them to freeze the accounts of anyone targeted by sanctions, and prevent their access to funds.

There was a wave of criticism and anger from Iraqi politicians and leaders of armed factions, especially those associated with Iran, who complained of “unilateral sanctions that violate Iraqi sovereignty and target Iran and its allies in Iraq under the pretext of human-rights abuses and corruption.”

The protests were accompanied by heavy pressure on Iraqi Prime Minister Adel Abdul Mahdi and the governor of the central bank to change the policy. Four days later the bank issued a new circular that limited the financial freeze to US dollars only, permitting withdrawal of Iraqi dinars. It was then that the surge in dollar purchases through middlemen began.

Bankers said depositors were withdrawing their funds in Iraqi currency "to avoid attracting the attention of the US Treasury, which monitors the movement of the dollar in Iraq.”

Iraqi security officials, members of parliament and armed faction leaders told Arab News that most politicians and commanders associated with Iran, or who enjoyed its support, were “deeply concerned” as they believed they could be targeted by US Treasury sanctions at any time. This has prompted them to withdraw their money from Iraqi banks and transfer it abroad to “minimize the damage.”

“The sanctions have deeply confused and concerned them,” a senior Iraqi national security official said. “They began to withdraw their money from Iraqi banks and settle their financial assets with the Iraqi government to reduce the damage and avoid having their assets frozen and property seized in the event of sanctions.

“Our information suggests that they transfer most of the money to private companies in Dubai, and use some of it to buy property, both inside and outside Iraq.

“Actually, this is not new. They have been laundering their money for years, but what has happened now is that the sanctions have entangled them and forced them to change how they do it.”


Iranian Guard holds anti-warship ballistic missile drill

Iranian Guard holds anti-warship ballistic missile drill
Updated 35 min 39 sec ago

Iranian Guard holds anti-warship ballistic missile drill

Iranian Guard holds anti-warship ballistic missile drill
  • Footage showed two missiles smash into a target that Iranian state television described as “hypothetical hostile enemy ships”
  • In recent weeks, Iran has increased its military drills as the country tries to pressure President-elect Joe Biden over the nuclear accord

TEHRAN, Iran: Iran’s paramilitary Revolutionary Guard conducted a drill Saturday launching anti-warship ballistic missiles at a simulated target in the Indian Ocean, state television reported, amid heightened tensions over Tehran’s nuclear program and a US pressure campaign against the Islamic Republic.
Footage showed two missiles smash into a target that Iranian state television described as “hypothetical hostile enemy ships” at a distance of 1,800 kilometers (1,120 miles). The report did not specify the type of missiles used.
In the first phase of the drill Friday, the Guard’s aerospace division launched surface-to-surface ballistic missiles and drones against “hypothetical enemy bases.” Iranian state television described the drill as taking place in the country’s vast central desert, the latest in a series of snap exercises called amid the escalating tensions over its nuclear program. Footage also showed four unmanned, triangle-shaped drones flying in a tight formation, smashing into targets and exploding.
Tensions between Washington and Tehran have increased amid a series of incidents stemming from President Donald Trump’s unilateral withdrawal from Iran’s nuclear deal with world powers. Amid Trump’s final days as president, Tehran has recently seized a South Korean oil tanker and begun enriching uranium closer to weapons-grade levels, while the US has sent B-52 bombers, the USS Nimitz aircraft carrier and a nuclear submarine into the region.
In recent weeks, Iran has increased its military drills as the country tries to pressure President-elect Joe Biden over the nuclear accord, which he has said America could reenter.
Iran fired cruise missiles Thursday as part of a naval drill in the Gulf of Oman, state media reported, under surveillance of what appeared to be a US nuclear submarine. Iran’s navy did not identify the submarine at the time, but on Saturday, a news website affiliated with state television said the vessel was American. Helicopter footage of the exercise released Thursday by Iran’s navy showed what resembled an Ohio-class guided-missile submarine, the USS Georgia, which the US Navy last month said had been sent to the Arabian Gulf.
Iran has missile capability of up to 2,000 kilometers (1,250 miles), far enough to reach archenemy Israel and US military bases in the region. Last January, after the US killed a top Iranian general in Baghdad, Tehran retaliated by firing a barrage of ballistic missiles at two Iraqi bases housing US troops, resulting in brain concussion injuries to dozens of them.
Trump in 2018 unilaterally withdrew the US from Iran’s nuclear deal, in which Tehran had agreed to limit its uranium enrichment in exchange for the lifting of economic sanctions. Trump cited Iran’s ballistic missile program among other issues in withdrawing from the accord.
When the US then increased sanctions, Iran gradually and publicly abandoned the deal’s limits on its nuclear development.