ERBIL, Kurdistan Region of Iraq - A recently published investigation into a corruption case involving Iraq’s central bank selling dollars to individuals claiming to leave the country but staying claimed that over 151,000 people benefitted from such scheme that amounts to over $600 million, with analysts claiming that such violations are inevitable.

In 2023, the Iraqi currency market witnessed a surge in the dollar rate for various reasons. The dinar-dollar exchange rate reached approximately 1,700 dinars per one US dollar, while it was stable around 1,500 dinars per one dollar.

In response, the Central Bank of Iraq (CBI) implemented measures to stabilize the dinar's value against the dollar, aiming to restore it to its previous level of around 1,500 dinars. One of the measures implemented was to permit Iraqis to acquire US dollars exclusively through officially authorized outlets designated by the Central Bank of Iraq, with a maximum limit of $3000 per traveler a month.

Recently, Al-Alam Al-Jadeed (al-aalem) newspaper published exclusive documents issued by the Federal Board of Supreme Audit regarding an investigation into a corruption case involving the sale of dollars to Iraqis traveling outside Iraq. The case involves CBI employees, private banks, currency exchange companies, and tourism companies.

The investigation documents revealed that more than 151,000 citizens purchased dollars from banks under the guise of travel, only to sell them on the currency market (parallel market) without actually traveling.

The Bureau report emphasized that "the Central Bank has not provided us with reasons and details for imposing fines and penalties on private banks and currency exchange companies for violations related to the sale of cash dollars to travelers, despite our request directed to the Banking Supervision Department, where we were only provided with the total amount of fines."

The New Region contacted Manar Al-Oubaidi, Chairman of the Iraq Future Foundation for Economic Research and Consultation, to inquire about whether the Central Bank of Iraq (CBI) has implemented precautionary measures to address such potential fraud or manipulation attempts.

"The Central Bank attempted to implement preventive measures against manipulation operations by providing authorized selling platforms for travelers. However, the temptations were significant; the exchange rate differential was large, and the financial amounts involved were substantial,” he said. “With such a gap in the exchange rate, violations are inevitable, and they cannot be controlled regardless of the strength of the system and the precautionary measures."

Regarding the challenges faced, Oubaidi said that "it is a challenging process, especially at a time when the Iraqi government is seeking measures to reduce the exchange rate, which was the primary concern."

The total profit from this fraudulent operation exceeded $600 million, as per the documents.

Furthermore, the documents by the Federal Board of Supreme Audit revealed irregularities in passport numbers, said "numerous inaccurate and incomprehensible codes were included in the passport number field for some travelers' names, despite the passport number being a primary identifier for cash dollar sales."

Oubaidi did not provide a definitive answer regarding the involvement of external parties in this scandal or any cash smuggling outside Iraq.

“I am not sure if there are external parties involved or if there is any smuggling operation happening. I do not have any information on this aspect,” he said. “However, there is an increasing demand for the dollar in the local cash market to cover either trade with other countries or for other needs. Therefore, I cannot be precise or certain about this point."

The New Region contacted CBI for comment but did not receive a response at the time of publication.

During a recent trip to the United States, Iraq's Prime Minister Mohammed Shia’ al-Sudani held discussions with President Joe Biden and representatives from the US Treasury. Emphasizing the need for action, US officials underscored Iraq's responsibility to enhance measures aimed at curtailing the smuggling of US dollars to Iran and Syria.