ERBIL, Kurdistan Region of Iraq – The Central Bank of Iraq (CBI) has issued a new set of measures to tackle the prevalence of foreign currency smuggling and money laundering, The New Region has learned.

The CBI’s regulations, according to information acquired by The New Region, are set to go into effect starting in November and include forcing businessmen to submit detailed receipts of purchases made abroad before the transferal of money outside of Iraq.

The measures come amid sanctions imposed by the US on several Iraqi banks, individuals, and entities over allegations of smuggling foreign currencies, US dollars in particular, to Iran.

Earlier in October, the US Department of the Treasury announced the imposition of sanctions on three Iraqi bank executives, accusing them of laundering money for Iran's Islamic Revolutionary Guard Corps (IRGC) and Iran-backed militias in Iraq, including Kataib Hezbollah and Asaib Ahl al-Haq, in extension of the country’s “maximum pressure” campaign on Tehran and its affiliates across the region.

Banking analyst and former manager of RT bank Hamila Gardi told The New Region earlier on Saturday that the US-imposed sanctions are a result of Iraqi banks making exceptions for well-connected clients, such as raising the spending and withdrawal limits for certain clients, allowing them to withdraw more than the regular limit introduced by the banks.

Gardi noted that Iraqi banks operate under the supervision of the US Federal Treasury. “Every 45 days, the banks submit … [their reports] to the Central Bank [of Iraq], and the Central Bank raises it” to the US Federal Treasury, she said.

A discrepancy between the value of the US dollar as set by the CBI compared to its value in the local currency markets has been exploited for years by individuals and companies taking advantage of the difference, despite repeated government efforts to address these schemes.

Those taking advantage of this discrepancy often use multiple bank-issued cards to exchange and withdraw their Iraqi dinars in US dollars in foreign countries at the CBI’s rate of 1,320 dinars per one USD before selling it upon returning to Iraq in the currency markets at a markup for a quick profit.

Iraq has long struggled to balance ties with the two rival countries, Iran and the US. While the US remains an important financial partner, Iraq is heavily under Iran’s influence due to allied militias and deep-rooted diplomatic and economic relations.