Iraqi banks used US-created system to funnel funds to Iran
Ali Ghulam was the undisputed dollar king of Iraq for almost a decade. His three Baghdad banks wired tens of billions of dollars in that time outside the country, ostensibly for car parts, furniture and other imports. He was one of the biggest operators in an ad hoc banking system set up around two decades ago under the U.S.
occupation that gave the Federal Reserve Bank of New York a key role in processing Iraq’s international transactions. Years later, when the Fed finally began looking closely at where the money was going, it shut him down almost overnight. U.S.
officials suspect his banks were among more than two dozen Iraqi banks involved in funneling dollars to Iran and its militia allies, using front companies and falsified invoices to circumvent sanctions that block Iran from the global financial system. Audits of Ghulam’s banks completed in May, reviewed by The Wall Street Journal, reveal extraordinary details of overseas dollar transactions that auditors said raised money-laundering concerns. Ghulam, in interviews, denied the allegations.
Among Iraqi banks overall, as much as 80% of the more than $250 million in dollar wire transfers flowing through them on some days were untraceable and some portion of that amount went secretly to Iran’s Islamic Revolutionary Guard Corps and the anti-U.S. militias it supports, according to U.S. officials.
A top U.S. Treasury official told Iraqi officials at a Baghdad meeting in January that Iraqi banks “deliberately exploited" their access to U.S. dollars to support the Quds Force, a paramilitary arm of the IRGC, and also the militia groups operating in Iraq that the Iranian government backs, according to U.S.
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