Iraq to Ban Cash Withdrawals and US Dollar Transactions Starting January 1, 2024: Reuters
Move Aims to Combat Financial Crimes and Evasion of US Sanctions on Iran
In a significant effort to combat financial crimes and thwart the evasion of US sanctions on Iran, Iraq has announced a ban on cash withdrawals and transactions in US dollars, effective January 1, 2024. This bold step is aimed at curbing the misuse of Iraq's hard currency reserves and addressing the illicit use of a substantial portion of the $10 billion that Iraq imports in cash from the New York Federal Reserve each year.
Mazen Ahmed, the Director-General of Investment and Remittances at the Iraqi Central Bank (CBI), provided insights into the rationale behind this decision. He stated that the primary objective is to eliminate the illicit use of approximately 50 percent of the annual cash imports from the New York Federal Reserve, which has been linked to various financial crimes.
This move underscores Iraq's commitment to upholding financial integrity and transparency while aligning with international efforts to combat money laundering and illicit financial activities. Additionally, it seeks to mitigate the risk of Iraq being used as a conduit for evading US sanctions imposed on Iran.
The decision by Iraq's central bank is expected to have far-reaching implications for the country's financial landscape, prompting businesses and individuals to adapt to alternative means of conducting transactions. While the move is aimed at improving the country's financial stability and reputation, it may also pose initial challenges for the local economy as it transitions away from the widespread use of US dollars.
As the January 1, 2024 deadline approaches, Iraq will likely undergo a period of adjustment, with financial institutions, businesses, and the public at large adapting to the new currency regulations. The Iraqi government will be closely monitoring the implementation of this ban to ensure its effectiveness in curbing financial crimes and preventing the misuse of hard currency reserves.
This decisive step by Iraq reflects the ongoing efforts of nations to strengthen their financial systems, prevent illicit activities, and ensure compliance with international sanctions, particularly in regions where financial stability is paramount.