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A British investigative report reveals that the pressure of the US Federal Reserve paralyzed the Iraqi markets and encouraged the smuggling of dollars across the borders.
Paratha News Agency 449 2023-02-05
The rope of lying is short.... The dollars went to Turkey and Dubai, and not to Iran, as the liars claim
The British "Middle East Eye" website (https://www.middleeasteye.net/news/iraq-us-efforts-money-laundering-sparks-dollar-smuggling) said that
the pressures imposed by the US Federal Reserve on the Central Bank of Iraq to curb corruption and illegal flows of dollars paralyzed Iraqi markets and encouraged large-scale dollar smuggling across the border.
The British website said in a report that,
"By imposing new restrictions on the Iraqi dollar auction, which Baghdad uses to transfer the US dollars it received for oil sales, the Federal Reserve has placed Iraq in one of the largest financial crises it has faced since 2003."
"Unable to convert its petrodollars into dinars as easily as it used to be, the Iraqi government is struggling to pay its obligations, including the salaries of millions of public employees, pensions and social support," he continued.
“The governor of the Central Bank, Mustafa Ghaleb, resigned on Monday, due to his inability to face the crisis,” the advisor to the prime minister, Mohamed Shiaa al-Sudani, told Middle East Eye.
The Iraqi government took several urgent steps to address the crisis. It opened more official currency exchange offices, launched a plan to encourage small traders and investors to use the dollar auction, suspended taxes on some commodities, and introduced subsidies, among other measures.
However, dollar auction sales still lag behind the average, according to the report.
Public foreign exchange auction data showed that January sales did not exceed $131 million per day on average, compared to $227 million in October.
As a result, dollar exchange rates on the black market are rising.
The exchange rate of the dollar in the Baghdad black market, on Thursday, was 1,740 dinars to the dollar, compared to 1,480 dinars in October.
This volatility had indirect effects on the wholesale markets and was strongly reflected in the prices of consumer goods. The price of some foodstuffs, such as sugar and cooking oil, has doubled, according to the report.
* Send dollars to the ground
The Federal Reserve's new review measures, which put more scrutiny on the source of foreign funds used to buy dollars at a dollar auction, were introduced in November.
Iraqi officials, bankers, and owners of exchange and financial brokerage firms told Middle East Eye that the measures led to the reluctance of merchants and capital owners to participate in the auction to avoid revealing their identities, the purpose of the money transfers, the identity of the final beneficiary, and other sensitive information.
Instead, they turned to the black market and other unofficial methods to obtain dollars, which led to a significant rise in the smuggling of dollars from Iraq by land, and maintained high exchange rates, according to the report.
A member of the Association of Iraqi Private Banks told MEE that
"private banks previously dealt with all the details for major clients who wanted to exchange dinars in a dollar auction." The banker stated,
"The major clients do not want to disclose any information related to the sources of their money or their identities for security or financial reasons, and some do not want to waste time in routine paper procedures."
Two of Al-Sudani's advisors told MEE that
"intelligence indicates that dollar smuggling operations have grown recently by land through the semi-autonomous Kurdistan region in northern Iraq, and from there to Turkey or Dubai."
In response, the Iraqi government set up several new sonar-equipped checkpoints along the road from Baghdad to Kurdistan.
Meanwhile, security forces have launched a campaign to track down currency dealers and brokers who buy and sell dollars on the black market.
Security sources said that many of them have already been arrested during the past few days.
This has spooked exchange offices, which get a fixed daily share of the dollar auction. Almost all of them have stopped selling dollars except to known clients for fear of arrest.
Similarly, WhatsApp and Viber groups that were used to solicit dollars from banks and private brokers have been deleted out of concern that they could be hacked or compromised, security and financial sources told MEE.
Despite this, at least $70 million is smuggled daily from Iraq through the Kurdish region, Iraqi bankers and officials told MEE.
One of the owners of an exchange company involved in dollar smuggling said that his business only grew: "Frankly, all this harassment by the security services exacerbated the crisis and revived our work." They added that
"the profits that we are making now in return for providing the dollars required for merchants and owners of capital, whether in Dubai or Turkey, have multiplied dozens of times over the past few weeks."
"We don't ask any questions and the merchant or customer doesn't want to answer any questions about him or his money, that's why they turn to us.
All they have to do is make a phone call and send their Iraqi money. Sooner or later, that's it."
*Replace the auction
Iraq's economy relies heavily on oil sales, which have been deposited with the US Federal Reserve since 2004.
To extract its money and convert it into dinars, the Iraqi Central Bank requires dollars from the Federal Reserve, which it then sells to private banks and a few other financial institutions, such as the exchange Currencies, through the Daily Dollar Auction.
However, Washington is tired of using the dollar auction to launder money and feed dollars in places like Syria and Iran, which are under heavy US sanctions, according to the report.
The recent scandal known as the “theft of the century,” when $2.5 billion was illegally extracted from an Iraqi government bank account and laundered through private banks, seemed like the last straw, and prompted the Fed to insert new checks on the money transfers used in the auction.
In response, all but a few of the 72 private banks stopped using the auction.
To replace this source of dollars, people are beginning to rely on brokers and bankers who can obtain them through more illegal means, according to the report.
According to CBI data reviewed by MEE, there are 1,094 companies licensed for banking and financial services. Of these, 249 have an A bank rating and 81 have a B rating.
These companies are entitled to participate in the auction in dollars, with funds they secure that are ostensibly earmarked for imported goods and local orders.
Their weekly dollar stake is determined by each company's bank rating.
An "A" rated company can get $1,800,000 a week, while a "B" rated company can get $750,000, bankers told MEE.
Brokers are now buying dollars from these exchange companies and transporting them overland to Kurdistan.
Three owners of exchange and financial brokerage firms and Iraqi officials told Middle East Eye that a group of influential local officials and politicians take these dollars through the Ibrahim al-Khalil border crossing into Turkey.
The owners of exchange companies said that the Turkish authorities charge $5 for every $10,000 collected as customs fees. The smuggled money is deposited in private accounts in Turkish banks, and some find their way to private bank accounts in Dubai.
The owner of the exchange company involved in the process told the sites,
"The customer agrees to the required amount in Baghdad and sends us the equivalent amount in Iraqi currency, so that he can get his money in dollars in Turkey or Dubai."
“All I need is to make a phone call to a person in Dubai or Turkey, so that he can deliver the money in cash to someone named by the customer or transfer it to the next country according to the customer’s request.
* Smuggling dollars or laundering dinars?
Owners of exchange and brokerage firms told MEE that the cost of transferring money abroad has increased one and a half times over the past week, as the process has become "more difficult and more expensive".
Sources told the site that the fees charged by brokers when they take cash out of Iraq do not exceed $15,000 for every $1 million.
But according to three owners of money exchange and brokerage firms and two bankers, it costs $184,000 to exchange $1 million in a deal to get that money out of Iraq — far more than the local rate.
In fact, before the Federal Reserve initiated auditing procedures, some exchange companies charged only $80 for every $10,000 transferred abroad, sometimes offering the service for free to valued customers.
With these kinds of new public expenditures, it suggests that the people trying to get dollars out of Iraq are either neighboring countries with liquidity problems or people who need to launder their money.
A senior Iraqi finance official told Middle East Eye,
"You don't see the real players here. Most of those who run dollar exchange companies are tools.
They are nothing more than cards ready to be burned whenever needed."
"The operation, in fact, is a mixture of dinar laundering and dollar smuggling.
The two operations serve each other and many local, regional and international players participate in it," he added.
Corruption and criminal activities, such as oil and drug smuggling, leave money at risk across Iraq. The official said,
“The owners of this money are either shareholders in private banks, or they have established private banks, or they sponsor and protect private banks to launder this money.
“No better way to launder this money has been found than through a foreign currency auction.”
The annual reports of the Central Bank's Money Laundering and Terrorist Financing Office for the years 2019, 2020 and 2021 showed that international and domestic money transfers were among the "most frequently used tools" for money laundering.
Reports showed that in 2021, overseas transfers accounted for 81% of suspicious transactions recorded by the AML/CFT Office.
Officials and bankers told MEE that the real profits made from these dollar smuggling operations are not those made by brokers.
They said that it was agreed on a 20 percent fee for withdrawing dollars from Iraq, and the beneficiaries are these numbers linked to private banks.
The financial official said that before the Fed's new revision measures were taken, most of the funds were smuggled through the foreign currency auction.
The official said that private banks, exchange companies and financial brokerage firms have been participating in the dollar auction for years in the name of mysterious clients, providing forged invoices and import documents.
"The funny thing is that the processes of dinar laundering and dollar smuggling are intertwined in Iraq, and whoever works in this process works in the other until they complement each other," he said, adding that
efforts to clamp down on them will require. years.
"Everyone must share the pain for some time to contain this nightmare," he warned. He added,
"The continuation of the situation as it is now means the collapse of the Iraqi economy soon, and the government's inability to secure monthly salaries and finance operational projects, so we have to find our way through this crisis."
https://burathanews.com/arabic/reports/425885
https://www.middleeasteye.net/news/iraq-us-efforts-money-laundering-sparks-dollar-smuggling
Paratha News Agency 449 2023-02-05
The rope of lying is short.... The dollars went to Turkey and Dubai, and not to Iran, as the liars claim
The British "Middle East Eye" website (https://www.middleeasteye.net/news/iraq-us-efforts-money-laundering-sparks-dollar-smuggling) said that
the pressures imposed by the US Federal Reserve on the Central Bank of Iraq to curb corruption and illegal flows of dollars paralyzed Iraqi markets and encouraged large-scale dollar smuggling across the border.
The British website said in a report that,
"By imposing new restrictions on the Iraqi dollar auction, which Baghdad uses to transfer the US dollars it received for oil sales, the Federal Reserve has placed Iraq in one of the largest financial crises it has faced since 2003."
"Unable to convert its petrodollars into dinars as easily as it used to be, the Iraqi government is struggling to pay its obligations, including the salaries of millions of public employees, pensions and social support," he continued.
“The governor of the Central Bank, Mustafa Ghaleb, resigned on Monday, due to his inability to face the crisis,” the advisor to the prime minister, Mohamed Shiaa al-Sudani, told Middle East Eye.
The Iraqi government took several urgent steps to address the crisis. It opened more official currency exchange offices, launched a plan to encourage small traders and investors to use the dollar auction, suspended taxes on some commodities, and introduced subsidies, among other measures.
However, dollar auction sales still lag behind the average, according to the report.
Public foreign exchange auction data showed that January sales did not exceed $131 million per day on average, compared to $227 million in October.
As a result, dollar exchange rates on the black market are rising.
The exchange rate of the dollar in the Baghdad black market, on Thursday, was 1,740 dinars to the dollar, compared to 1,480 dinars in October.
This volatility had indirect effects on the wholesale markets and was strongly reflected in the prices of consumer goods. The price of some foodstuffs, such as sugar and cooking oil, has doubled, according to the report.
* Send dollars to the ground
The Federal Reserve's new review measures, which put more scrutiny on the source of foreign funds used to buy dollars at a dollar auction, were introduced in November.
Iraqi officials, bankers, and owners of exchange and financial brokerage firms told Middle East Eye that the measures led to the reluctance of merchants and capital owners to participate in the auction to avoid revealing their identities, the purpose of the money transfers, the identity of the final beneficiary, and other sensitive information.
Instead, they turned to the black market and other unofficial methods to obtain dollars, which led to a significant rise in the smuggling of dollars from Iraq by land, and maintained high exchange rates, according to the report.
A member of the Association of Iraqi Private Banks told MEE that
"private banks previously dealt with all the details for major clients who wanted to exchange dinars in a dollar auction." The banker stated,
"The major clients do not want to disclose any information related to the sources of their money or their identities for security or financial reasons, and some do not want to waste time in routine paper procedures."
Two of Al-Sudani's advisors told MEE that
"intelligence indicates that dollar smuggling operations have grown recently by land through the semi-autonomous Kurdistan region in northern Iraq, and from there to Turkey or Dubai."
In response, the Iraqi government set up several new sonar-equipped checkpoints along the road from Baghdad to Kurdistan.
Meanwhile, security forces have launched a campaign to track down currency dealers and brokers who buy and sell dollars on the black market.
Security sources said that many of them have already been arrested during the past few days.
This has spooked exchange offices, which get a fixed daily share of the dollar auction. Almost all of them have stopped selling dollars except to known clients for fear of arrest.
Similarly, WhatsApp and Viber groups that were used to solicit dollars from banks and private brokers have been deleted out of concern that they could be hacked or compromised, security and financial sources told MEE.
Despite this, at least $70 million is smuggled daily from Iraq through the Kurdish region, Iraqi bankers and officials told MEE.
One of the owners of an exchange company involved in dollar smuggling said that his business only grew: "Frankly, all this harassment by the security services exacerbated the crisis and revived our work." They added that
"the profits that we are making now in return for providing the dollars required for merchants and owners of capital, whether in Dubai or Turkey, have multiplied dozens of times over the past few weeks."
"We don't ask any questions and the merchant or customer doesn't want to answer any questions about him or his money, that's why they turn to us.
All they have to do is make a phone call and send their Iraqi money. Sooner or later, that's it."
*Replace the auction
Iraq's economy relies heavily on oil sales, which have been deposited with the US Federal Reserve since 2004.
To extract its money and convert it into dinars, the Iraqi Central Bank requires dollars from the Federal Reserve, which it then sells to private banks and a few other financial institutions, such as the exchange Currencies, through the Daily Dollar Auction.
However, Washington is tired of using the dollar auction to launder money and feed dollars in places like Syria and Iran, which are under heavy US sanctions, according to the report.
The recent scandal known as the “theft of the century,” when $2.5 billion was illegally extracted from an Iraqi government bank account and laundered through private banks, seemed like the last straw, and prompted the Fed to insert new checks on the money transfers used in the auction.
In response, all but a few of the 72 private banks stopped using the auction.
To replace this source of dollars, people are beginning to rely on brokers and bankers who can obtain them through more illegal means, according to the report.
According to CBI data reviewed by MEE, there are 1,094 companies licensed for banking and financial services. Of these, 249 have an A bank rating and 81 have a B rating.
These companies are entitled to participate in the auction in dollars, with funds they secure that are ostensibly earmarked for imported goods and local orders.
Their weekly dollar stake is determined by each company's bank rating.
An "A" rated company can get $1,800,000 a week, while a "B" rated company can get $750,000, bankers told MEE.
Brokers are now buying dollars from these exchange companies and transporting them overland to Kurdistan.
Three owners of exchange and financial brokerage firms and Iraqi officials told Middle East Eye that a group of influential local officials and politicians take these dollars through the Ibrahim al-Khalil border crossing into Turkey.
The owners of exchange companies said that the Turkish authorities charge $5 for every $10,000 collected as customs fees. The smuggled money is deposited in private accounts in Turkish banks, and some find their way to private bank accounts in Dubai.
The owner of the exchange company involved in the process told the sites,
"The customer agrees to the required amount in Baghdad and sends us the equivalent amount in Iraqi currency, so that he can get his money in dollars in Turkey or Dubai."
“All I need is to make a phone call to a person in Dubai or Turkey, so that he can deliver the money in cash to someone named by the customer or transfer it to the next country according to the customer’s request.
* Smuggling dollars or laundering dinars?
Owners of exchange and brokerage firms told MEE that the cost of transferring money abroad has increased one and a half times over the past week, as the process has become "more difficult and more expensive".
Sources told the site that the fees charged by brokers when they take cash out of Iraq do not exceed $15,000 for every $1 million.
But according to three owners of money exchange and brokerage firms and two bankers, it costs $184,000 to exchange $1 million in a deal to get that money out of Iraq — far more than the local rate.
In fact, before the Federal Reserve initiated auditing procedures, some exchange companies charged only $80 for every $10,000 transferred abroad, sometimes offering the service for free to valued customers.
With these kinds of new public expenditures, it suggests that the people trying to get dollars out of Iraq are either neighboring countries with liquidity problems or people who need to launder their money.
A senior Iraqi finance official told Middle East Eye,
"You don't see the real players here. Most of those who run dollar exchange companies are tools.
They are nothing more than cards ready to be burned whenever needed."
"The operation, in fact, is a mixture of dinar laundering and dollar smuggling.
The two operations serve each other and many local, regional and international players participate in it," he added.
Corruption and criminal activities, such as oil and drug smuggling, leave money at risk across Iraq. The official said,
“The owners of this money are either shareholders in private banks, or they have established private banks, or they sponsor and protect private banks to launder this money.
“No better way to launder this money has been found than through a foreign currency auction.”
The annual reports of the Central Bank's Money Laundering and Terrorist Financing Office for the years 2019, 2020 and 2021 showed that international and domestic money transfers were among the "most frequently used tools" for money laundering.
Reports showed that in 2021, overseas transfers accounted for 81% of suspicious transactions recorded by the AML/CFT Office.
Officials and bankers told MEE that the real profits made from these dollar smuggling operations are not those made by brokers.
They said that it was agreed on a 20 percent fee for withdrawing dollars from Iraq, and the beneficiaries are these numbers linked to private banks.
The financial official said that before the Fed's new revision measures were taken, most of the funds were smuggled through the foreign currency auction.
The official said that private banks, exchange companies and financial brokerage firms have been participating in the dollar auction for years in the name of mysterious clients, providing forged invoices and import documents.
"The funny thing is that the processes of dinar laundering and dollar smuggling are intertwined in Iraq, and whoever works in this process works in the other until they complement each other," he said, adding that
efforts to clamp down on them will require. years.
"Everyone must share the pain for some time to contain this nightmare," he warned. He added,
"The continuation of the situation as it is now means the collapse of the Iraqi economy soon, and the government's inability to secure monthly salaries and finance operational projects, so we have to find our way through this crisis."
https://burathanews.com/arabic/reports/425885
https://www.middleeasteye.net/news/iraq-us-efforts-money-laundering-sparks-dollar-smuggling
