The US Federal Reserve is worried that American currency is falling into the hands of ISIS militants and sanctioned regimes, according to The Wall Street Journal.
Cash shipments to Iraq have dramatically increased in recent years despite a sluggish Iraqi economy, and officials are concerned that some of the exchange houses that buy this currency are funneling dollars to groups like ISIS, also known as the Islamic State, and sanctioned governments like Iran.
Emily Glazer, Nour Malas, and Jon Hilsenrath described in The Journal how the cash flow works.
“Foreign central banks hold dollars and can call on the Fed for currency distribution,” they wrote. “The new $100 notes are flown to Baghdad after leaving a Fed facility in East Rutherford, N.J. In Baghdad, the bills are moved to the Iraqi central bank, where they are sold in daily auctions in which Iraqi financial firms request dollars that they pay for largely using dinars, the country’s currency.”
The cash shipments went from $3.85 billion in 2012 to $13.66 billion in 2014, raising eyebrows in the US, The Journal reported, adding that officials were worried that Iraqis were hoarding dollars rather than circulating the currency in the economy.
The US also suspects that money was being sent to three sanctioned banks in Iran as well as ISIS militants, according to The Journal. Iraqi officials reportedly confirmed that money had gone to ISIS through currency auctions.