Financial Crime World

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Financial Sanctions Enforcement in Iraq: Treasury Targets Al-Huda Bank for Terrorist Financing Abuses

The US Department of the Treasury has taken swift action to protect the Iraqi and international financial systems from abuse by terrorist financiers, fraudsters, and money launderers. In a recent move, the department issued a finding and notice of proposed rulemaking (NPRM) identifying Al-Huda Bank, an Iraqi bank accused of serving as a conduit for terrorist financing, as a foreign financial institution of primary money laundering concern.

Background

According to FinCEN, evidence has demonstrated that Al-Huda Bank served as a significant conduit for the financing of Foreign Terrorist Organizations (FTOs). The proposed special measure would prohibit domestic financial institutions and agencies from opening or maintaining a correspondent account for or on behalf of this foreign financial institution.

Sanctions Imposed

The Office of Foreign Assets Control (OFAC) has imposed sanctions on:

  • Hamad al-Moussawi, the owner and president of the board of directors of Al-Huda Bank, for his support to the IRGC-QF, including through support for its proxy militia groups in Iraq.
  • Fly Baghdad and its CEO, as well as three leaders and supporters of Kata’ib Hizballah and a business that laundered money for the group.

These sanctions aim to disrupt the flow of funds to terrorist organizations and bring about a positive change in behavior.

Impact

The sanctions imposed by OFAC will have significant implications for individuals and entities doing business with Al-Huda Bank or other designated persons. Specifically:

  • All property and interests in property of the designated persons that are in the United States or in the possession or control of US persons must be blocked and reported to OFAC.
  • Non-US financial institutions and other persons that engage in certain transactions or activities with sanctioned entities and individuals may also expose themselves to sanctions or enforcement actions.

Commitment to Enforcement

The Treasury Department is urging all parties to comply with these sanctions and to report any suspicious activity related to terrorist financing or money laundering. In a statement, the Treasury Department emphasized its commitment to enforcing sanctions and combating terrorism:

“Our actions today demonstrate our unwavering resolve to disrupt the financial networks that support terrorism and to bring about a positive change in behavior.”

Conclusion

The US Department of the Treasury’s swift action against Al-Huda Bank and other designated persons demonstrates its commitment to protecting the global financial system from terrorist financing and money laundering abuses.