The United States has barred 14 Iraqi banks from conducting dollar transactions, the Wall Street Journal reported, citing US officials.
The ban, which was imposed by the Treasury Department and the Federal Reserve Bank of New York, is part of a crackdown on the siphoning of US currency to Iran, the report said Wednesday.
The United States uncovered information that the Iraqi banks engaged in money laundering and fraudulent transactions, some of which may have involved sanctioned individuals and raised concerns that Iran could benefit, the newspaper said, Reuters reported.
"We have strong reason to suspect that at least some of these laundered funds could end up going to benefit either designated individuals or individuals who could be designated," a senior US official was quoted as saying by the Journal.
"And of course the primary sanctions risk in Iraq relates to Iran."
Among the banks on the US ban list are Al Mustashar Islamic Bank, Erbil Bank, World Islamic Bank, and Zain Iraq Islamic Bank, the newspaper said.
Iraq's private banks association did not immediately respond to a request for comment. The Iraqi government, the US Treasury Department and the New York Fed did not immediately respond to requests for comment.
Iran has been unable to access billions of dollars in assets in several countries due to US sanctions.
Piling Pressure
The United States has insisted that oil-rich Iraq, the OPEC group's second-largest producer, moves towards self-sufficiency. Washington has put pressure on Iraq to stem the flow of dollars into neighboring Iran.
The news comes after the United States' move to let Iraq pay Iran for electricity via non-Iraqi banks, a US official said, a step Washington hopes may keep Tehran from forcing unpopular power cuts during the sweltering Iraqi summer.
Secretary of State Antony Blinken signed a 120-day national security waiver allowing Iraq - heavily dependent on Iranian electricity - to deposit such payments into non-Iraqi banks in third countries instead of into restricted accounts in Iraq, said the official who spoke to Reuters on condition of anonymity.
Monies put into the non-Iraqi accounts, like those deposited into Iraqi banks, will also be restricted, still requiring US permission for Iran to get access to them and only for spending on humanitarian goods.
Tehran has in the past pushed Baghdad to secure US permission to release such funds by cutting Iranian natural gas exports to Iraq, limiting Iraq's ability to generate power and forcing deeply unpopular electricity cuts.
Baghdad’ Request
The latest waiver was expanded to permit payments to banks outside Iraq at the request of the Iraqi government, apparently in the hopes that this might transfer some of the pressure that Iran has exerted on Baghdad to other countries.
"We have to help the Iraqis with this perennial pressure from the Iranians to access the money," said the US official.
"The Iraqis have requested, and now we have agreed, to expand the waiver," said the US official, saying this might help ensure better compliance with the US requirement that any disbursements be for humanitarian purposes.
"It also helps the Iraqis, at least somewhat, to have an argument to make (to Iran) that they are not in control of the money that they have paid (into non-Iraqi accounts)," he added.
It is not clear, however, whether Iran might ease up on Iraq as a result. Tehran could decide it has greater leverage over Iraq than over other nations and continue to exert pressure. Iran's mission to the United Nations did not immediately respond to a request for comment.
Iran is under extensive US economic sanctions reimposed in 2018 after then-US president Donald Trump abandoned the nuclear deal that Tehran struck with major powers Britain, China, France, Germany, Russia and the United States in 2015.
Trump believed his policy of "maximum pressure" on Iran would force it to accept more stringent restrictions to its nuclear program, which the United States, European powers and Israel claim may be designed to obtain a nuclear weapon. Iran has long denied such ambitions.
As a result of Trump's withdrawal from the deal and US President Joe Biden's failure to revive it, Iran could make the fissile material for one bomb in 12 days or so, according to US estimates, down from a year when the accord was in force.
Despite its large oil and gas reserves, Iraq relies on Iran for natural gas that generates as much as 45% of its 14,000 megawatts of daily electricity consumption.
