CBI hires US consultant firm to revamp Iraq's banking sector

Shafaq News/ Iraq's central bank (CBI) has signed a deal with consulting firm Oliver Wyman to overhaul the country's banking sector following a serial ban of Iraqi banks from US dollar transactions. 

In July 2023, the US imposed a ban on 14 Iraqi banks from conducting transactions in US dollars. This measure was reportedly taken to prevent the transfer of dollars from Iraq to Iran and other countries that are under US sanctions.

The central bank said in a statement that Oliver Wyman would develop solutions to reintegrate these banks into both the Iraqi and international banking systems and improve their procedures to meet global standards.

This initiative aims to facilitate direct banking relationships and enhance the quality of services provided by Iraqi banks to better serve the Iraqi economy. Oliver Wyman is expected to commence its work soon.

The central bank governor, Ali Allaq, who is currently visiting New York, led the Iraqi delegation that signed the contract.

In February, Iraq banned eight local commercial banks from engaging in U.S. dollar transactions, taking action to reduce fraud, money laundering, and other illegal uses of US currency. 

The banks were banned from accessing the Iraqi central bank's daily dollar auction, a main source of hard currency in the import-dependent country that has become a focal point of a US crackdown on currency smuggling to neighboring Iran.

A rare ally of both the United States and Iran with more than $100 billion in reserves held in the US, Iraq relies heavily on Washington's goodwill to ensure that its access to oil revenues and finances are not blocked.