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US Treasury Slams Door on Iraqi Bank Tied to Terrorist Financing

The US Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) has taken a significant step in preventing the flow of terrorist funds through the global financial system by issuing a final rule severing Al-Huda Bank from the US financial system.

Background

Al-Huda Bank, an Iraqi bank, was identified as a foreign financial institution of primary money laundering concern by FinCEN in January. The bank has been accused of serving as a conduit for terrorist financing, exploiting its access to US dollars to support designated foreign terrorist organizations.

The Problem

According to FinCEN, Al-Huda Bank has facilitated the activities of:

• Iran’s Islamic Revolutionary Guard Corps (IRGC)
• IRGC-Quds Force
• Iran-aligned Iraqi militias Kata’ib Hizballah and Asa’ib Ahl al-Haq

The bank’s chairman is also accused of complicity in its illicit financial activities.

Solution

To prevent the flow of terrorist funds, FinCEN has issued a final rule prohibiting domestic financial institutions and agencies from:

• Opening or maintaining correspondent accounts for Al-Huda Bank
• Processing transactions involving Al-Huda Bank’s correspondent account

The rule also requires special due diligence on foreign correspondent accounts that may be used to process transactions with Al-Huda Bank.

Impact

The move is seen as a major victory in the global fight against terrorist financing and comes as part of ongoing efforts by the US government to combat the use of shell companies and other methods to conceal illicit financial activities.