Iraq revokes operating licence of Bank Melli Iran

The Central Bank of Iraq has revoked the operating licence of Bank Melli Iran, citing international sanctions and the bank’s limited operations in Iraq. The process was confirmed in a Central Bank document verified by two bank officials.

Bank Melli Iran is the largest bank in Iran. It did not immediately respond on Thursday to a Reuters request for comment on the contents of the document, which was dated 31 January.

“In light of the losses accrued by your branch in Iraq and its limited activities and its inability to implement or expand banking activities and… its inclusion in international sanctions, it is decided to cancel your licence,” said the Central Bank in the document passed to Bank Melli Iran.

The US Treasury sanctioned the Iranian bank in 2018, alleging that it was being used by the Islamic Revolutionary Guard Corps “to dispense funds to Iraqi Shia militant groups, and Bank Melli’s presence in Iraq was part of this scheme.”

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.

Despite being brought to power in October 2022 mainly by Iraqi Shia Muslim parties and armed groups with close ties to Iran, Iraq’s government has cooperated closely with Washington on measures aimed at limiting Tehran’s financial activities in Iraq and modernising the financial system.

Iraq recently banned eight local commercial banks from engaging in US dollar transactions, acting to reduce fraud, money laundering and other illegal uses of the currency, in a move welcomed by the US Treasury.

In July 2023, Baghdad banned 14 banks from conducting dollar transactions as part of a wider crackdown on dollar smuggling to Iran via the Iraqi banking system after a request from Washington, according to Iraqi and US officials.

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