Whilst Iraq is a sovereign nation, to allow Iran to actually gain entry to the Iraqi financial system, and thereby allowing an end run around American financial sanctions, may indicate in more ways than one the true leanings of the present Iraqi government.  We understand that certain promises and representations have been made as to reconstruction of Iraq by the Iranian government, but this will enable smart Iranian financial managers to use Iraqi institutions as a screen for their funds transfers.

Given the present chaotic nature of Iraq's civil war, one must assume that functional and effective compliance is years away. Therefore, moving illicit Iranian funds through the Iraqi system should be a largely undetected, and certainly unopposed, exercise. Will Iraq eventually rival Dubai as a convenient financial centre for international funds transfers?

American compliance officers who bank defence contractors operating in Iraq may now find it necessary to curtail their financial relationships with Iraqi banks, in the absence of clear and convincing evidence that those banks are not acting as correspondents for the Iranian bank.

Iran's emergence as an economic force in Iraq may eventually accelerate America's military departure, but for the time being, the granting of a bank license there can only create a headache for America's bankers. Watch those transfers out of Iraq, remembering also that American investigations of its own corrupt military contractors is proceeding ahead at a rapid pace. Everything originating from Iraq now need special attention, lest your bank show up prominently next year an investigative article.