The Financial Times reports that Iraq’s central bank has tightened its clampdown on its sales of dollars, amid fears that buyers are using them to launder money and skirt international sanctions on neighbouring Iran and Syria.
The bank unveiled new rules on Monday to force customers to prove their identities by supplying tax records and import licences. Its deputy governor, Mudher Salih Kasim, told the FT, “Iraq is liberal and the two countries next door are under sanctions. You can see the consequences are very bad: this is spillover.”
The Iranian rial is now trading at 16,000 to the dollar, versus 12,500 in December.
Demand for dollars is as high as $400m and $450m a day, more than double some estimates of the legitimate need, may be due to criminality and Iraqi middle men settling debts on behalf of clients in Iran and Syria.
The new rules will compel all commercial buyers of dollars at the central bank’s near-daily auctions to produce tax clearance certificates and, from 30th June, papers to prove they are allowed to import the goods they say they are using the money to buy.
In February, the central bank asked dealers to submit cheques rather than cash, in order to identify currency buyers, but this largely failed because purchasers were simply hiring third parties such as “porters from the street” to open bank accounts on their behalf.
One currency dealer told The National, "I don't have the right to ask my client what he is going to do with the dollars when he takes it from my shop. It's almost impossible to track where the money is going, because the currency has been taken to the street."
(Sources: Financial Times, The National)