Treasury & Banking in Iraq

Report date: 
29 Mar 2022

Chair’s Overview

As is evident from recent events, things can go wrong when one country invades another. Iraq is very much a case in point…..

Despite the serious and much reported security issues, all participants find it relatively easy to conduct business in the country. Foreign currency is readily available, and can be remitted out of the country, though things can slow down when the price of oil declines and dollars become scarcer. However, most participants do not have large operations, and they often sell their hardware offshore in dollars. 

There are operational challenges:

Relations between the Kurdistan region and Baghdad are not good: it can be very difficult to transfer cash between the two.

Not many foreign banks are very active in the country: Standard Chartered Bank (SCB) is one of the most active, and one of the few to be present in Baghdad and Kurdistan.

In Kurdistan, tax payments have to be made through a local Kurdish bank, which often requires manual transactions in cash. The participant uses an Abu Dhabi bank to manage this.

In the rest of the country, people often use Lebanese banks. One participant expressed concern that dollars are settled through an exchange house in the UAE – this process is not as transparent as the participant would like, and it is difficult to monitor counterparty risk. 

Bottom line: for participants who are still doing business there, Iraq is not as difficult as might be imagined. There are a lot of issues around Kurdistan, and transactions are often routed via the UAE. Not all international banks have a big appetite for Iraqi risk, but good services can be obtained from UAE or Lebanese banks. Dollar availability can be variable, but it is usually possible to remit cash out. Not for the faint hearted – but it works!

Topics covered in this report: 
FX, Bank Relationships, Banking
Service providers discussed in this report: 
Standard Chartered, Credit Suisse, SWIFT, Byblos Bank, Bank of Beirut, Abu Dhabi Islamic Bank, National Bank of Iraq

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