Mechanism of the Central Bank of Iraq to counter currency smuggling

Mechanism of the Central Bank of Iraq to counter currency smuggling


Mechanism of the Central Bank of Iraq to counter currency smugglingShatha Khalil*
The Central Bank of Iraq operates with a new mechanism that coincides with the directions of Prime Minister Muhammad Shia’ al-Sudani to start following auditing methods and a new “Swift” transfer system in a manner similar to the global system and international standards to reduce manipulation and corruption, which requires accurate details of foreign transfers. Which led to the return of many remittances, and local banks reduced the purchase of large amounts of dollars due to these severe measures.
The new mechanism adopted by the Central Bank of Iraq brings about this rise in exchange rates and in the buying and selling operations that have taken place in recent days in exchange shops, as according to the meeting of the Central Bank’s management on 12-15-2022, Board of Directors Resolution No. 192 of 2022, with the signature of the bank’s governor Central Bank Mustafa Ghaleb is frightening, as the Central Bank of Iraq will sell the dollar to the bank for the purposes of documentary credits at an amount of 1455 dinars to the dollar instead of 1460, that this mechanism aims to reduce corruption such as currency smuggling and money laundering, as the process of building an electronic platform requires more time to achieve financial stability that The new government is looking forward to it.
The Governor of the Central Bank, Mustafa Ghaleb Makhaif, confirmed that, in cooperation with officials in the US Treasury for Terrorism and Financial Crimes Affairs, work has been done to implement international standards for combating money laundering and terrorist financing and the Central Bank’s commitment to them, and in the same context to reduce fraud and corruption, as the Central Bank began building the platform months ago. In coordination with international bodies for the purpose of tightening and regulating the operations of the foreign currency buying and selling window, ensuring effective control over it, and working to stabilize it in the near future, as a specialized international company has been commissioned to build it and link banks with the central bank through it, and that the platform requires providing information about customers requesting transfers and entities. The beneficiary and correspondent banks.

According to official sources at the Central Bank, the central bank’s reserves and the state’s financial solvency in general are in excellent condition and at their best levels in decades, and that the current supply of foreign currency is not linked to resources, but rather to administrative and audit procedures, which will be bypassed in the coming days.
The Central Bank has taken a number of measures to expand the supply of foreign exchange to meet the public’s demand for cash dollars, and the management of the window has been directed to meet the demands of banks for the coming days faster by executing double requests, and a preferential price has been given to implement documentary credits for the purpose of covering domestic demand.
Some economists emphasized that among the important measures of the Central Bank of Iraq is preventing several banks from entering the currency sale auction after warnings from the US Treasury Department, which was reflected in the decline in the volume of the dollar sold in the currency sale auction, and the banks are private Iraqis from the currency sale auction (Al-Ansari, Al-Sharq Al-Awsat , Al-Qabid, and Asia) accused of smuggling currency. And it acquired nearly 40% of the central bank’s sales of the dollar, which tightened the procedures around private banks for Iraqi funds before they bought the dollar so that they would be safe from the new central bank procedures, which was reflected in the fluctuation of the exchange rate of the dollar on the black market to the disruption of the country’s commercial movement. But it is temporary, and the coming period will witness stability in the exchange rate, but it depends on the success of these measures to eliminate financial and administrative corruption.

There are many aspects of corruption, including the speculations waged by currency dealers, from which they obtain huge amounts of money without the presence of any accountant or censor. The government campaign against corruption has made many owners of illegal funds rush to try to get their money out of Iraq quickly to avoid anti-corruption measures, which has caused This imbalance in prices, as the scale of corruption has reached such that several countries neighboring Iraq are suffering from difficulties in obtaining dollars, tending to buy dollars from Iraq and smuggle them through the uncontrolled border crossings.
It is the duty of all dealers, including investors and merchants, to cooperate with banks and the central bank by working in accordance with the commercial contexts in force globally, and importing under documentary credits, as it provides a guarantee for the importer, preserves his rights, secures the imported goods, and enables him to benefit from banking facilities to cover the value of the credit. To prevent commercial fraud and smuggling, to develop investment in Iraq in a way that serves the citizen and the economy.

In conclusion, the measures taken by the Sudanese government and the management of the Central Bank, to activate the control tools according to international standards, and that the rise will not last long, but it imposes a new situation that gives hope in the coming periods, and the government stresses to all dealers, including investors and merchants, the need to cooperate with banks and the Central Bank, Where the government affirms its commitment to maintaining the stability of the local market, by supporting the stability of the exchange rate of the dollar against the Iraqi dinar, and it supports the steps of the Central Bank, for better stability of exchange rates, and the most important thing is to control the exchange companies and the parallel market until it becomes clear who is working to buy the dollar from the outlets Unofficial, and being able to track the banks involved in removing the dollar from Iraq without investing it in goods or services inside Iraq.