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Baghdad has agreed to implement stricter controls to prevent the flow of US dollars into Iran and Iranian-backed militias in Iraq, a move that has led to the Trump administration lifting a four-month suspension on shipments of American currency to the country.
According to a report by the Wall Street Journal, the US Treasury Department has confirmed that the shipments have resumed in recent weeks after Baghdad pledged to enhance its safeguards against the illicit diversion of US dollars. Iraqi officials have acknowledged the resumption of financial transfers but declined to provide specific details regarding the measures agreed upon with the US.
The US had imposed the suspension in March on shipments of cash to Iraq due to concerns that funds were being routed to Iranian-backed militias operating in the country. The move was seen as a means to prevent Tehran from circumventing international sanctions through the use of Iraqi currency-exchange businesses and salary payments.
Iraqi officials had sought to ease the restrictions after Washington’s concerns were raised, arguing that they posed a major challenge to the country’s financial stability and posed economic hardship on ordinary Iraqis. Following the lifting of the suspension, the US Treasury Department stated that the decision to resume shipments was contingent on Iraq’s willingness to bolster its anti-money laundering and combating the financing of terrorism (AML/CFT) framework.
Sources within the Iraqi government have confirmed that Baghdad has implemented new measures to track and monitor the movement of US dollars throughout the country. These enhancements aim to reduce the risk of funds falling into the hands of prohibited entities, a crucial step towards preventing the diversion of US dollars to Iran and its proxy forces.
The resumption of US dollar shipments is seen as a testament to Baghdad’s efforts to demonstrate its commitment to adhering to international norms and standards in regards to AML/CFT. While some observers have expressed skepticism regarding the efficacy of these measures, Iraqi officials have argued that they are essential for maintaining the country’s financial stability and promoting economic development.
In a statement, a US Treasury Department spokesperson stressed the importance of Iraq meeting its anti-money laundering obligations, stating that “US efforts to help Iraq build its capacity in this area are a key component of our bilateral partnership.” The development marks an important breakthrough in US-Iraq relations and underscores the complexities involved in navigating Washington’s stance towards Tehran.