Iraq announces deal with US to reconsider sanctions imposed on Iraqi banks

Iraq’s Central Bank Governor Ali al-Allaq announced an agreement with the US Treasury on reconsidering sanctions imposed on Iraqi banks, the state news agency INA said on Thursday.

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Iraq has banned eight local commercial banks from engaging in US dollar transactions, taking action to reduce fraud, money laundering and other illegal uses of US currency days after a visit by a top US Treasury official.

The banks are banned from accessing the Iraqi central bank’s daily dollar auction, a main source of hard currency in the import-dependent country that has become a focal point of a US crackdown on currency smuggling to neighboring Iran.

A rare ally of both the United States and Iran with more than $100 billion in reserves held in the US, Iraq relies heavily on Washington’s goodwill to ensure that its access to oil revenues and finances are not blocked.

Iraqi Foreign Minister Fuad Hussein, in a phone call with US Secretary of State Antony Blinken on Tuesday, stressed the need to return to the negotiating table over the future of the US-led international military coalition in Iraq, the foreign ministry said in a statement.

Talks between the two countries began in January, but less than 24 hours later three US service members were killed in an attack in Jordan that the United States said was carried out by Iran-backed militant groups in Syria and Iraq. The talks have since paused then.

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Iraq bans eight local banks from US dollar transactions in attempt to reduce fraud