“Transnational” corruption: Iranian fraud to drain Iraq’s funds
“Transnational” corruption: Iranian fraud to drain Iraq’s funds
2026-08-31
Shafaq News – Special Translation
The Middle East Forum Institute spoke of a widespread, cross-border embezzlement mechanism that drains Iraqi state funds into the pockets of diaspora communities in the United States and the West, serving the goals of the Iranian regime.
The American Institute stated in a report translated by Shafaq News Agency that when former Prime Minister Haider al-Abadi first revealed the extent of the “ghost soldiers” phenomenon that inflates the Iraqi army’s payroll, observers focused on internal corruption, making them overlook the systematic deterioration that was emerging.
The institute explained in its report that while analysts were discussing embezzlement operations linked to fictitious beneficiaries of social welfare programs and phantom government employees, a more dangerous transnational system was taking shape, running illegal financial and intelligence operations that crossed national borders and drained state funds.
According to the American report, what appeared to be a local crisis related to corruption in local pension regulations has turned into a parallel financial system that contributes to the embezzlement of state funds to maintain and expand what it called “Iranian-backed proxy networks” abroad through a dedicated network of loyal beneficiaries.
The report continued, stating that this system focuses on supposed Iraqi government employees, using fake names and identity cards, with the government depositing their salaries into Iraqi bank accounts linked to Iraqi payment cards. Iraqis and Arabs in the diaspora then use these cards, including in the United States.
He added that intermediaries linked to armed factions and located in Minnesota, Michigan, Texas, Florida and California oversee large groups of card users, who receive financial commissions to liquidate these funds. These funds are then transferred through unofficial money transfer companies linked to the militias, known as “black money,” which are active in Basra and the Jordanian capital, Amman.
The report considered that the perpetrators of this operation, by directing funds in this manner, evade the monitoring and auditing mechanisms designated for traditional electronic financial transfers, adding that these systematic transfers of funds from the Iraqi financial system to the American economy allow for obtaining dollars and benefiting from exchange rate differences, and misleading the auditing process to separate beneficiaries from the accounts that are created from the funds.
The report addressed what happened in the case of the beneficiaries of compensation from the displaced persons in the Rafha camp, which was established on Saudi territory between 1991 and 2009, where an Iraqi law was enacted through the Central Bank in order to compensate Iraqi dissidents who fled Iraq, many of whom were members of political movements loyal to Iran, as the law guarantees the provision of monthly salaries for life, in addition to travel expenses and educational privileges for refugees who were resettled throughout the United States, Canada, Australia and Europe.
He adds: Throughout the past decade, this mechanism has expanded to include spouses and children born after resettlement. According to the report, network brokers exploited this expansion by using fraudulent marriage certificates from Islamic centers accredited by Iraqi diplomatic missions, and later through engineering witness testimonies to include new ideological loyalists to benefit from the system, including non-Iraqis.
The report noted that what was organized here on the basis of humanitarian compensation has become a sustainable line funded by the Iraqi state that strengthens a network of sympathizers with the Iranian regime within Western societies.
The report argued that the strategic value of this structure lies in its ability to transform financial relationships into operational capabilities by creating a low-cost platform for influence and mobilization when necessary. It added that the funded services provided to Iran’s proxies contribute to maintaining long-term relationships within diaspora communities, allowing for recruitment, intimidation of opponents, money laundering, and intelligence gathering.
The report stated that Iranian strategists activated this network during the Black Lives Matter protests in 2020 to promote unrest and influence the Arab diaspora to support more radical candidates in the US elections, adding that Tehran later mobilized the same networks to promote Hamas’s narrative during the Gaza war and to gather information on Jewish communities.
The American Institute concluded by saying that Washington must realize that the fraudulent forgery operation now extends deep into the United States, which allows Iranian forces to operate with plausible deniability, and that “the goal is not to treat all beneficiaries of Rafha and cardholders as suspects, but rather to dismantle the mechanisms used by Iranian intelligence to select fraudulent systems in salaries and social welfare in Iraq.”
shafaq.com
