Central bank to vet Iraqi purchases in dollars to stem hard cash smuggling

CENTRAL BANK TO VET IRAQI PURCHASES IN DOLLARS TO STEM HARD CASH SMUGGLING Iraq, August 7, 2012 Iraq has placed new restrictions on purchases by Iraqi traders of foreign goods in latest bid to bring the flow of billions of dollars abroad every month under control, Central Bank Governor Mudher Saleh said.

Saleh said the bank no longer favors cash payments or direct transfers of money to cover deals Iraqi traders strike for the import of foreign goods.

The bank is setting new payment terms under which traders are required to do business through guarantees or letters of credit, he said.

Saleh said while Iraqi purchase in terms of dollars were mushrooming, the volume of goods entering Iraq was decreasing. “This means that there are some murky deals and smuggling of foreign cash,” he said.

The bank says each month more than $4 billion leave the country supposedly in return for the purchase of foreign goods.

He warned that without restrictions and vetting, the country might eventually be emptied of hard cash

“The situation requires more control and audit of operations involving money transfer. We believe it is better for the country to rely on opening of letters of credit to guarantee” no hard cash leaves Iraq for purposes other than trade.

The use of letters of credit will make it easy for the bank to determine whether the money has actually been sued to pay for goods or not, he said.