The Central Bank of Iraq has approved branch applications from two private Iranian financial institutions, Parsian Bank and Karafarin Bank. Iranian banks operating out of Iraq could easily evade UN, EU and US sanctions imposed against Iran, for transactions involving the purchase of dual-purpose goods could hide in legitimate trade being conducted for the massive Iraqi reconstruction programme. It will also facilitate money laundering of Iranian funds, through the use of Western banks in the Middle East, which could be accessed through third-party Iraqi banks. Though some commentators have warned that the Central Bank of Iraq would never approve the branch license applications, approval was granted on 1 August, 2010. It is important to know that trade between the two neighbors averages $7bn annually, and Iran recently opened a trade office in Soleimanieh, in Northern Iraq.

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