U.S. License Allows Wind-Down of Iraq Development Bank Transactions Through Dec. 1

Key Facts

The U.S. Treasury Department’s Office of Foreign Assets Control announced on Oct. 29 that it had issued amended General License FF-1, authorizing the wind-down of certain transactions involving Iraq’s International Development Bank for Investment and Finance. The license permits transactions ordinarily necessary to wind down dealings with the bank and entities in which it holds a direct or indirect interest of at least 50%, through 12:01 a.m. Eastern time on Dec. 1, 2026. The measure does not impose a general order to end all dealings with the bank; it grants limited authorization to wind down covered transactions. Any payment to a blocked person must be deposited in a blocked account under U.S. regulations. The license also does not authorize other prohibited transactions involving people not specified in it unless separate authorization is issued.

License FF-1 replaced the previous license, FF, issued on Oct. 15, and fully revoked it effective Oct. 29. The amendment follows the Treasury’s addition of the bank to the sanctions list on Oct. 15 under Executive Order 13902. The department said the basis for the listing was the bank’s operation in Iran’s financial sector, a U.S. characterization of the action. The new license thus sets the scope and deadline for winding down permitted transactions following the listing. Any dealings outside what the text authorizes remain subject to sanctions rules or require separate authorization.

The Treasury justified the bank’s listing with allegations concerning financial services for Iran and access to dollars. It said the bank “provides financial facilitation services and access to U.S. dollars for Iran,” and had abused its access to the dollar transfer auction, which was later canceled. The department added that the bank uses Iran’s capital in its business, then transfers profits to Iran in dollars each month. These remain allegations that the Treasury attributed to the bank in its sanctions announcement. The department also linked the listing to a broader asset-blocking rule covering entities owned 50% or more, directly or indirectly, by one or more blocked persons.

The bank rejected the Treasury’s allegations in a statement reported on Oct. 16, saying it was ready to cooperate with Iraq’s central bank and the U.S. Treasury through official and legal channels. The bank said protecting depositors and customers was a priority. Its response came a day after Washington announced the listing and before the amended license was issued on Oct. 29. In its sanctions announcement, the Treasury placed the action within the “Economic Exclusion” campaign, which it said was announced on Aug. 24 to target Iranian revenue and financing channels. Treasury Secretary Scott Bessent said at the time that “the noose is tightening around Iran’s economy, and even Iran’s supposed allies cannot save it.”

The U.S. amendment followed a domestic measure concerning the bank’s dollar dealings. On Oct. 22, Iraq’s central bank barred the International Development Bank from dealing in dollars “in any form” and directed the order to licensed banks and non-bank financial institutions. The decision was issued by the central bank’s Banking Supervision Department, according to Shafaq News. The central bank’s decision therefore came six days after Washington listed the bank, while the amended U.S. license followed the Iraqi decision by a week. These measures coincided with broader developments in Iraq’s foreign-exchange market during October.

Against the backdrop of the foreign-exchange market, Iraq’s central bank governor said on Oct. 29 that the gap between the official dinar rate and its rate on the parallel market had narrowed to 9%, from about 24%. In early October, the central bank had raised its dollar selling rate to the public to 1,520 dinars, compared with about 1,320 dinars previously. These figures place the ban on the bank’s dollar dealings during a period that saw a change in the official rate and a widening, then narrowing, of the gap between the two rates. The governor did not link these indicators to the U.S. license in the reported remarks. The license sets Dec. 1, 2026, as the deadline for authorization to wind down covered transactions.