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memri
March 28, 2019 No.
7970

Senior Former Hashd Al-Sha'bi Official To Saudi Alarabiya.net: Iraqi Central Bank Governor Is Collaborating With Iran In Counterfeiting, Money-Laundering – As Part Of Iran's Efforts To Circumvent U.S. Sanctions

On March 11, 2019, the Saudi news outlet Alarabiya.net, which is known for its anti-Iran views, published a report that quoted a former senior Hashd Al-Sha'bi and Badr Organization official as stating that officials in Iraq's financial system, headed by Central Bank of Iraq governor Ali Al-'Alaq, were operating in service of Iran's Islamic Revolutionary Guards Corps (IRGC) and participating in counterfeiting money and money-laundering for the IRGC and Hizbullah in Lebanon.  

The former Hashd Al-Sha'bi and Badr Organization official told the website, in an anonymous interview, that Al-'Alaq had met many times with Abu Mahdi Al-Muhandis, Hashd Al-Sha'bi deputy leader and right-hand man of IRGC Qods Force commander Qassem Soleimani. He added that "individuals blacklisted by the U.S.," among them Imam Ali Brigades commander Shibl Al-Zaydi, arrive frequently at Beirut's international airport to transfer the funds to the IRGC and Hizbullah.

According to the Alarabiya.net report, Iran is circumventing the U.S. sanctions in a number of ways. One is by counterfeiting Iraqi dinars in Iran and having Iranian pilgrims bring them into Iraq, where they are converted into U.S. dollars that are then smuggled into Lebanon via Rafic Hariri International Airport in Beirut and from there transferred to the IRGC forces there and to Hizbullah. Another is with the Central Bank of Iraq's involvement; it sells foreign currency to banks under Iranian ownership at an exchange rate lower than market rate, and the Shi'ite banks rake in profits which are used to fund IRGC activity.

It should be noted that in recent months Iran has been locking down its control of the Iraqi banking system in order to circumvent the U.S. sanctions.[1]As part of these efforts, Iranian President Hassan Rohani visited Iraq earlier this month, on March 11-13, 2019, and signed several memoranda of understandings for trade, oil, and transportation.

The following is the translation of the Alarabiya.net report:


Counterfeit bills (image: Alarabiya.net)

"'An Iraqi money mafia is operating in accordance with IRGC guidelines, leading the largest money-laundering operation in Iraqi history.'

"This serious admission is by a former top commander of Hashd Al-Sha'bi and the Badr Organization, in a phone conversation with Alarabiya.net, during which he exposed the secrets of the many counterfeiting and money-smuggling operations via the Iraq-Iran border to Hizbullah at Beirut airport and the IRGC in Tehran.

"He began: 'There are influential Iraqi figures who are taking advantage of Iraq's financial system, due to pressure [on them] from the armed factions in the country, to provide Iran with U.S. dollars in roundabout ways while at the same time circumventing the American sanctions...'

"The main way [this is done is by] flooding the Iraqi market with counterfeit dinars in order to buy dollars, with the backing of Central Bank of Iraq governor Ali Al-'Alaq, who is among those closest to former Iraqi prime minister Nouri Al-Maliki. [It was Al-Maliki who] personally insisted on [Al-'Alaq's] appointment as bank governor despite the many reservations. The counterfeit currency is smuggled across the border and is not subject to checkpoints. It is brought into Iraq by Iranians who are making pilgrimage to the holy sites at Karbala and Al-Najaf.'

"According to the Al-Hashd official, Central Bank of Iraq governor Al-'Alaq has met many times with Abu Mahdi Al-Muhandis, deputy leader of Hashd Al-Sha'bi, who is known as Qaassem Soleimani's man... in order to facilitate the transfer of dollars to the terror organizations – Hizbullah in Lebanon or the IRGC. He stressed that [the employees of] Iraq's financial institutions fear these people, who [are members of] designated terrorist organizations. Because of the threats [by IRGC and Hizbullah supporters in Iraq], they are following the Iranian guidelines and providing backing for the money laundering, even if it is at the expense of the Iraqi economy and the destruction of the local currency.

"Alarabiya.net tried many times, with no success, to speak with Ali Al-'Alaq on his cellphone, after being told by the information department of the Central Bank that he was abroad. We also tried to contact the head of the Administration of Financial Operations at the Central Bank, but were likewise unsuccessful.

"The Hashd official further revealed that 'individuals blacklisted by the U.S.'  were managing to enter Beirut airport, with the backing of Hizbullah officials, including Imam Ali Brigades secretary-general Shibl Al-Zaydi, who is the proxy of Qods Force commander Qassem Soleimani. According to this information, Shibl Al-Zaydi is a regular visitor to Beirut, and has met with Hizbullah's Iraqi affairs chief Muhammad Kotharani, in the capacity of his role to transfer funds to Hizbullah.

"There are many apprehensions regarding Al-'Alaq's administration of the Central Bank of Iraq, particularly in all things concerning the foreign currency auctions.[2] Knowledgeable sources told Alarabiya.net that the Central Bank is selling dollars to civilian 'Islamic Shi'ite' banks belonging to Iranian elements, at a rate lower than market rate. Thus [the civilian banks] are raking in huge profits that are being used to provide a regular cash flow to the IRGC and Hizbullah in Lebanon...

"According to the sources, another method being used [by Iran] to keep foreign currency is that the Iranian regime does not pay Iraq the entry visa fees for Iranian pilgrims. The amount of the fees is offset against  Iraq's debt to Iran for the natural gas and electricity that it imports [from Iran].[3]

"Alarabiya.net has obtained the reports on the counterfeit funds seized at Al-Najaf [International] Airport [in Iraq] in the last four months. Thus, on February 18, 2019, $28,000 in counterfeit currency and also 225,000 counterfeit Iraqi dinars were found in the possession of an Iraqi traveler coming from Beirut; on February 3, 2019, 39 million counterfeit Iraqi dinars were confiscated; on December 27, 2018, $66,000 were confiscated and on October 10, 2018, $448,000 in counterfeit bills were found in the possession of an Iraqi traveler..."[4]

 


[2] Foreign currency auctions, held by the Central Bank of Iraq at least once a week, allow banks and businessmen to acquire foreign currency. The actionshave been extensively used as a method of capital flight by corrupt politicians and as a method of money laundering to help Iran obtain dollars.

[3] It should be noted that during Iranian President Rohani's visit to Iraq, he announced that both sides had agreed that there would be no charge for entry visas to each other's countries. President.ir, March 11, 2019.

[4] Alarabiya.net, March 11, 2019.