Q & A
Question from wciappetta:
Concerning OFAC sanctions are still on the currency and have not yet been lifted, why is Citibank allowed currently to buy and sell IQD? Fair question.
Answer from Mnt Goat:
Guten Tag wciappetta. Yes, your question is a fair question but only if you are a newbie to my blog. I have covered this question many times already. But to help you understand let me say why can’t the banks sell dinar if the internet licensed brokers are selling it? What makes the internet dealers any more special than the banks? In this regard they are not.
The banks are special when they sell the dinar or other currencies in trading such as buying and selling. But this is in dealings with the US Treasury that these internet dealers do not have this kind of relationship since the do not have a “banking” license.
The banks do take a higher risk from the US Treasury if they do so in selling the dinar now. Remember that when ISIS invaded Iraq most banks simply refused to sell the dinar at risk of funding ISIS. Then in 2017 when the war with ISIS in Iraq was over, they once again sold it.
If they are selling the dinar now, they are doing it under a US Treasury license just like the internet brokers. No difference. The relationship with the US Treasury with the IQD is suspended until the OFAC sanctions are lifted. Get it? This is the key point.
Why not sell the dinar if there is money to be made on the spread. But this selling it today is much different than bypassing sanctions on a currency. Try to sell back your dinar to the banks and you will see a much difference picture. OFAC sanctions do not allow the banks to then take the dinar currency they bought from you (if they did buy it) and then sell it back to the US Treasury under normal banking relationships with the US Treasury.
So, under these OFAC sanctions why would a bank want to buy back any dinar since if they did, it would be only be to sell it right back to more customers like you so it is risky and they would limit their quantities. There is nothing else they could do with it due to the OFAC sanctions are in place.
So , you see the OFAC sanctions are more for in dealings with foreign countries vs a US bank. But to deal with a foreign entity the bank, the US bank would then be laundering money. Get it? To sell to you they know you in their banking relationship and can identify you.
From a civilian standpoint you don’t know or see how the entire banking system works. Banks transfer foreign currencies all the time to the US Treasury and can transfer to foreign countries too under the SWIFT system and the Central Banking system, Right now, until OFAC is lifted, the US Treasury will not deal in the dinars the SWIFT system also from the US banks will not deal in dinars. Is this why, under the currency auctions in Iraq they were forced to deal in US dollars only? Two reasons:
1.no large investment firms want to purchases large quantities of a sanctioned currency. Not only is it illegal it also goes against their financial managers professional license.
2.Since #1 is true who the hell wants the dinar outside of Iraq under these circumstances so for the country of Iraq to buy outside imports how would they pay for them? This is why they must still use the dollar.
So how do the banks get their dinar?
They purchase it just like the internet dealers purchase and they do not go through their normal channels such as they do with normal foreign currency and the US Treasury channels.
Right now having large quantities of any foreign currency is risky business for any bank since any foreign currency is volatile to global changes. So, the banks order it for you from the US Treasury Central Banking system on demand. They can not do this today.
You have to also understand that much of the OFAC sanctions are more logistical than anything else as I just described. Most of the time if you abuse it is giving a slap on the hand and fines if you don’t adhere to them unless you are dealing in large quantities with foreign entities and this is called then money laundering since sanctions are in place.
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