Iraqi Banks Exploited U.S. System to Fund Iranian Terrorists

A U.S.-designed financial system in Iraq has been revealed to be a massive pipeline for funneling billions of dollars to Iranian-backed terrorist groups. A recent Wall Street Journal report exposes how corrupt Iraqi banks abused the system, sending untraceable sums to Iran's Islamic Revolutionary Guard Corps (IRGC) and other terror organizations, all while U.S. officials looked the other way for years.

Following the 2003 invasion of Iraq, the U.S. established a system where the New York Federal Reserve held Iraq's oil earnings, sending physical cash back to Baghdad to support the fragile economy. But by 2012, Pentagon officials were warning the Obama administration that Iraqi banks were using this system to funnel money to Iran, circumventing U.S. sanctions.

• More than $800 million worth of fraud occurred each week, with up to 80% of daily transfers from certain banks being "untraceable."

• A private audit revealed that one of the key players, Ali Ghulam, funneled $3.5 billion to suspicious companies in the UAE within six months.

• Fraudulent invoices and fake vendors allowed these funds to slip past regulations, with much of the money ending up with Iran's IRGC, a designated terrorist organization.

Despite the warnings from U.S. officials, the Obama administration did not act swiftly. In fact, the administration’s track record included the cancellation of a major investigation into Hezbollah, another Iranian-backed terrorist group, raising serious questions about its priorities when it came to Iran's influence in the region.

The abuse of the system was evident. Ghulam’s banks alone were wiring billions to phony companies, avoiding scrutiny because Iraq wasn't part of SWIFT, the global messaging system used by banks. While Iraqi and U.S. officials tried to audit these activities, it wasn't until 2022 that the Federal Reserve finally took serious action, shutting down Ghulam's operations overnight. By then, the damage had been done.

This revelation highlights yet another failure of the Obama administration to confront Iran’s aggressive tactics in the Middle East. By ignoring the flow of billions to terrorists through Iraq's banking system, the administration allowed groups like the IRGC to strengthen their foothold, further destabilizing the region.

As the world continues to grapple with the consequences of Iran’s terror network, the question remains: why did the U.S. wait so long to act?

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