The Central Bank of Iraq has revoked the operating license of Bank Melli Iran, the largest Iranian bank, as reported by Reuters on Thursday, February 8. According to a document from the Central Bank of Iraq dated January 31, confirmed by two senior officials of the bank, the reason for this decision is the international sanctions imposed on Bank Melli Iran.
A section of the document from the Central Bank of Iraq states: “Due to the losses incurred by your branch in Iraq, its restricted operations, and the inability to expand banking activities, as well as being listed in the international sanctions, it has been decided to revoke your operating license.”
In 2018, the U.S. Department of the Treasury sanctioned Bank Melli Iran for its use by the Islamic Revolutionary Guard Corps (IRGC) to distribute financial resources among Shiite militia groups in Iraq. The U.S. Treasury claimed that the activities of Bank Melli Iran in Iraq were part of the financial network supporting these groups.
More than $100 billion of Iraq’s foreign exchange reserves, closely tied to both Iran and the U.S., is held in special accounts in the United States. Iraq relies on the goodwill of the U.S. to access funds from its oil revenues and financial resources.
Despite the current Iraqi government coming to power with the support of Shiite groups and Iran-backed militias in October 2022, it has collaborated with the U.S. in restricting the financial activities of the Iranian regime in Iraq.
The Iraqi government recently prohibited the operations of eight local commercial banks in dollar transactions and exchanges. It has also taken measures against bank fraud, money laundering, and other forms of illegal use of U.S. dollars, actions that have been welcomed by the U.S. Treasury.
According to Iraqi and U.S. officials, in July 2023, the Iraqi government, at Washington’s request and as part of the fight against dollar smuggling, revoked the licenses of 14 Iraqi banks for the transfer and trading of dollars through the Iraqi banking network to Iran.
