Private Banks Investigated for Money Laundering

He said manipulation operations began in private banks with currency conversion in 2004, which led to the emergence of financial mafias that dominated the market. This was followed by the Banking Act issued by the Central Bank in March 2004: Paragraph 28 prevents private banks from entering or participating in investment operations and even owning more property than they need (i.e., preventing investment in the real estate market).

This prompted banks to look for capital and methods to illegally make profits; they used capital from unknown sources and thus laundered money that was not subject to taxes. Funds from abroad and others from local unknown sources began entering private banks. The owners of that money even dominated certain departments in banks and controlled the auction sales of US dollars practiced by the Central Bank, while they exploited that money for personal benefits.

Banks also falsified the documents of the money’s destination, in cooperation with influential figures inside and outside Iraq, knowing that the money was often being circulated out of the country to the Gulf, Jordan, Iran and other countries.

However, banking expert Majed al-Souri told Al-Monitor that private banks were not an intelligence apparatus that follows up on all documents. This is why they are not responsible for the source of the money they receive. In the event that there are any doubts, the Central Bank is notified, and in its turn, it notifies the competent authorities that are supposed to take the suitable legal measures.

He noted that private banks are the victim of a wrong general view, which is circulated by the leaders and officials dominating economic activity in Iraq.

Souri referred to the serious imbalance in following up on the movement of funds in Iraq, which largely contributes to financial irregularities and illegal deals. Finding out about financial corruption and illegal trading comes too late, as the banks’ audits are received by the Central Bank a month after the initial operations are conducted, and starts auditing these previous operations for another month. This means that two months will have passed since the start of the audit operations and by then, the funds will have probably reached their final destination, which could be anywhere in the world.