Days after a key U.S. Treasury official visited, Iraq has barred eight local commercial banks from transacting in dollars in an effort to reduce fraud, money laundering, and other illicit uses of U.S. currency.

The banks are prohibited from participating in the daily dollar auction held by the Iraqi central bank, which is the primary source of hard currency for the import-dependent nation and the focus of an American campaign against the smuggling of money into Iran.

Relying primarily on Washington’s goodwill to guarantee that its access to oil income and finances is not impeded, Iraq is an unusual ally of both the United States and Iran, holding more than $100 billion in reserves in the U.S.

A central bank document that was validated by a bank official specified the banks that were prohibited.

The Kurdistan International Islamic Bank for Investment and Development, Ahsur International Bank for Investment, Investment Bank of Iraq, Union Bank of Iraq, Al Huda Bank, Al Janoob Islamic Bank for Investment and Finance, Arabia Islamic Bank, and Hammurabi Commercial Bank are the ones mentioned.

Ashur, Hammurabi, and the chairman of the private bank association in Iraq, which is in charge of the banks in question, did not immediately reply to calls for comment.

A Treasury spokesman said, “We commend the continued steps taken by the Central Bank of Iraq to protect the Iraqi financial system from abuse, which has led to legitimate Iraqi banks achieving international connectivity through correspondent banking relationships.”

part of a larger campaign to stop dollars being smuggled into Iran through the Iraqi financial system. U.S. and Iraqi officials said that the decision was made in response to a request from Washington.

According to the central bank, banks that are prohibited from transacting in dollars are nonetheless permitted to operate and do so in other currencies.

Brian Nelson, the senior sanctions officer for the U.S. Treasury Department, met with top Iraqi authorities this week in Baghdad to explore ways to safeguard the international and Iraqi financial systems from terrorist, criminal, and corrupt actors.

During the visit, the Treasury imposed sanctions against Al-Huda Bank, alleging that the bank had transferred billions of dollars to organisations supported by Iran.

After the death of three U.S. soldiers, which has been attributed to hardline Iraqi factions, a senior Treasury official said that Washington wanted Iraq to do more to assist counter Iran-backed armed organisations operating out of Iraq.

Armed organisations with interests in Iraq’s extremely informal economy, particularly the banking sector, which has long been considered a hotbed of money-laundering, and major parties backed by Iran helped bring the current Iraqi government to power.

Nevertheless, collaboration between Iraqi Prime Minister Mohammed Shia al-Sudani and Western authorities has been praised for implementing financial and economic reforms that aim to align the Iraqi economy with global norms and limit Iran’s and its allies’ access to US cash.