Iraq’s Banking Sector Vulnerable to Financial Crime, Says Report

IRAQ’S BANKING SECTOR AT RISK OF FINANCIAL CRIME

A recent report by the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) has highlighted the vulnerabilities of Iraq’s banking sector to financial crime, particularly terrorist financing.

Al-Huda Bank: A Major Conduit for Terrorist Financing

The report identifies Al-Huda Bank as a major conduit for terrorist financing. The bank has been exploited by designated foreign terrorist organizations, including Iran’s Islamic Revolutionary Guard Corps and IRGC-Quds Force, as well as Iran-aligned Iraqi militias Kata’ib Hizballah and Asa’ib Ahl al-Haq.

Complicity of Al-Huda Bank Chairman

The report notes that Al-Huda Bank has for years used its access to U.S. dollars to support these groups. The bank’s chairman is complicit in its illicit financial activities, further exacerbating the problem.

FinCEN Takes Action

To address this issue, FinCEN has issued a final rule under section 311 of the USA PATRIOT Act. This rule severs Al-Huda Bank from the United States financial system by prohibiting domestic financial institutions and agencies from opening or maintaining correspondent accounts for or on behalf of the bank.

Call to Action: Address Illicit Finance-Related Vulnerabilities

The report highlights the need for Iraq to address its illicit finance-related vulnerabilities in order to prevent Iran and its proxies from exploiting these gaps to facilitate their destabilizing terrorist activities.