Financial Institutions and Terrorist Financing Tied to Iraq, Treasury Department Says

The US Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) has identified Al-Huda Bank, an Iraqi bank, as a foreign financial institution of primary money laundering concern due to its alleged involvement in terrorist financing.

Background

According to FinCEN, Al-Huda Bank has served as a significant conduit for foreign terrorist organizations (FTOs), including Iran’s Islamic Revolutionary Guard Corps (IRGC) and IRGC-Quds Force, as well as Iran-aligned Iraqi militias Kata’ib Hizballah and Asa’ib Ahl al-Haq.

Allegations of Illicit Activities

The bank’s chairman is complicit in the illicit financial activities, including money laundering through front companies that conceal the true nature of and parties involved in transactions. The bank has been controlled and operated by the IRGC and IRGC-QF since its establishment, and the chairman has been engaged in money laundering operations on behalf of these organizations.

Proposed Special Measure

To protect US banks from Al-Huda Bank’s activities, FinCEN is proposing a special measure that would prohibit domestic financial institutions and agencies from opening or maintaining correspondent accounts for or on behalf of the bank. This measure is part of Section 311 of the USA PATRIOT Act, which grants the Secretary of the Treasury authority to require special measures to defend against money laundering and terrorist financing risks.

Sanctions Imposed

The Treasury Department has also imposed sanctions on Hamad al-Moussawi, the owner and chairman of Al-Huda Bank, for his involvement in supporting Iran’s IRGC-QF. Additionally, the department has designated six key individuals affiliated with Kata’ib Hizballah, an Iraqi airline used by the IRGC-QF to transport fighters and weapons, as well as three other business entities and financial facilitators.

Public Comment

The proposed rule is currently available for public comment and can be accessed on the Federal Register website. Written comments may be submitted within 30 days of publication.

Key Points

• Al-Huda Bank identified as a foreign financial institution of primary money laundering concern
• Alleged involvement in terrorist financing, including support for Iran-aligned Iraqi militias
• Proposed special measure to sever bank’s access to US financial system
• Sanctions imposed on chairman and six key individuals affiliated with Kata’ib Hizballah
• Public comment period open until [date]