The Laundry Man by Kenneth Rijock ( Penguin/Random House UK)

Tuesday, August 7, 2012


It is currently estimated that at least four billion dollars is leaving Iraq each month. Yesterday, the Central Bank of Iraq sold $307.6m in US Dollars; today it was $280m. Whilst I understand that most investors are hesitant about holding large quantities of the weak Iraqi Dinar, there's much more to this story.

The amount of dollars exiting Iraq is increasing, whilst at the same time, the volume of goods entering the country is actually decreasing. Would some economist kindly explain that to me ? Also, we are into Ramadan now; international trade transactions are not being conducted; only food sales are active. So where are all those greenbacks going ?

It is common knowledge that large amounts of US currency are entering the Iranian economy, courtesy of the banking system operating in the Kurdish Regional Government (KRG), but there is much more to the puzzle than the banks in the KRG. Obviously, Bagdhad banks are involved as well.

However, not all the US currency is destined for Iran; money obtained by PEPs through bribes, kickbacks, or other corrupt activities is certainly headed for the UAE, and to banks in the EU. You need to be extremely careful, because many Middle Eastern PEPs have successfully obtained dual citizenship, or  immigrant investor status. A proper Enhanced Due Diligence investigation will pick up and expose anyone who is concealing their Iraqi origin.

If you are a compliance officer at an EU bank, I would suggest that you perform a look-back, upon all your high net worth Arab clients, to en sure that you did not miss any Iraqi PEPs masquerading as something else. Of course, if you have Arabic speakers at your bank who are knowledgeable in identifying regional linguistic identifiers, and they have personal front-line contact with the high net-worth clients, they may be able to separate the legitimate clients from the posers.

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