Money laundering, corruption the grim norm in kleptocrat-laden Iraq


News

page image

Iraq–A case-study in stunning levels of corruption, kleptocracy, money laundering

The New York Times Magazine yesterday published a long-form feature titled “Inside the Iraqi Kleptocracy.” It’s a bracing and extraordinary read on how a government and a nation—beset by turmoil, invasions, regime change, sanctions, and endless geopolitical tugs-of-war—can sink quickly and wholly into kleptocracy, money laundering, and existential despair.

Reporter Robert F. Worth describes in vivid detail the power of militias perpetrating shakedowns and frauds amidst the disappearance of the rule of law. The militias, Worth writes, “have been aided and abetted by a new Iraqi political class whose sole ethic is self-enrichment. Over the years, this cross-sectarian cabal has mastered scams at every level: routine checkpoint shakedowns, bank fraud, embezzling from the government payroll.”

A source for the Atlantic Council, an American think tank, estimates that Iraqi kleptocrats have moved $150 billion of state funds into their private accounts overseas. And the source wonders if the true figure is twice that amount. As with many kleptocrats, London luxury real estate is a popular investment location for Iraqis seeking to hide stolen money. The source estimates that $10 billion is in London real estate alone.

Worth goes on to detail daily “dollar auctions” of U.S. hard currency—auctions held by the Central Bank of Iraq.

The U.S. dollars arrive monthly $1-2 billion at a time because Iraq “routes the proceeds of its oil sales through an account at the New York Federal Reserve.” The stated purpose of the dollar auctions is to make available hard currency to importers and currency exchanges. But terrorists and money launderers seized upon the opportunity to get U.S. dollars.

Worth details the co-opting of the dollar auctions by criminals and kleptocrats, and the complicity of Iraqi commercial banks in the schemes. And he describes money laundering operations at a massive scale.

A largely cash-based economy beset by corruption helps sustain the extraordinary levels of money laundering and financial crime in Iraq. AML controls like customer due diligence and transaction monitoring are moot if cash transactions are the norm.

A large protest movement against the corruption emerged late last year. Protestors have maintained their calls for an end to corruption and the rebuilding of the nation’s economy and government. But a way forward for their movement amidst existing systems riddled with corruption remains unclear.

_______________________

SURETY CDD for CDD/KYC Onboarding in AML Compliance

Governance, Risk, and Compliance: Software solutions transform results, costs

AML Partners designs GRC and AML software solutions that transform the work of Governance, Risk, and Compliance. With AML Partners’ platform technology for RegTech, AML and GRC software solutions are easier, faster, and so much more efficient. Contact us today to learn how platform technology and our AML Ecosystem SURETY Eco can transform the efficiency and effectiveness of your unique GRC and AML Compliance efforts.  Contact us today to learn more or schedule a demo of SURETY Eco or the RegTech One platform. With extraordinary configurability and built for API extensibility, the RegTech Oneplatform powers a range of AML/KYC tools but also CECL workflows, vendor management, cyber risk workflows, FCPA workflows, and so much more. RegTech One: For your institution’s Network of Applications and Ecosystem of Permissioned Data.