Treasury Department Severs Iraqi Bank from US Financial System over Terrorist Financing Concerns

Washington D.C. - A Final Rule to Protect Integrity of Global Financial Systems

The U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) has issued a final rule prohibiting domestic financial institutions and agencies from opening or maintaining correspondent accounts for Al-Huda Bank, an Iraqi bank accused of facilitating terrorist financing.

Background: Terrorist Financing Concerns

• Al-Huda Bank has been used to launder money and finance designated foreign terrorist organizations, including the Islamic Revolutionary Guard Corps (IRGC) and IRGC-Quds Force.
• The bank’s chairman has been complicit in illicit financial activities, including money laundering through front companies.

FinCEN’s Decision

“We are taking action to protect the integrity of both the Iraqi and international financial systems,” said Under Secretary of the Treasury for Terrorism and Financial Intelligence Brian E. Nelson. “This decision will prevent Iran and its proxies from using Al-Huda Bank as a conduit for terrorist financing.”

The final rule, effective immediately, prohibits U.S. financial institutions from:

• Opening or maintaining correspondent accounts for Al-Huda Bank
• Taking reasonable steps to prevent transactions involving the bank’s correspondent account

Impact of the Final Rule

• The move is designed to sever Al-Huda Bank’s access to the US financial system and prevent it from being used to finance terrorist activities.
• Iraq continues to work on addressing vulnerabilities in its financial system that could be exploited by Iran and its proxies to support terrorist activities.

Accessing the Final Rule

The final rule is available on the Federal Register website, along with the January 31, 2024 notice of proposed rulemaking that preceded it.