FinCEN Finds Al-Huda Bank as Key Money Laundering Channel & Proposes Anti-Terror Financing Rule

January 31, 2024

Financial Crimes Enforcement Network (FinCEN) under the US Department of Treasury has issued a finding and notice of proposed rule-making (NRPM) highlighting Al-Huda Bank, an Iraq-based financial institution facilitating terrorist financing, as a major concern in money laundering.

To safeguard US financial institutions from the unlawful conduct of Al-Huda Bank, FinCEN is reportedly taking action under Section 311 of the USA PATRIOT Act. Section 311 alerts US financial institutions against foreign institutions, recognized as a primary source of money laundering. FinCEN has proposed a regulation suggesting the enforcement of special measure five, seeking to prohibit domestic financial institutions or agencies from opening or managing a correspondent account for Al-Huda Bank,  to exclude the bank from the US financial system, as per FinCEN’s press release.

While talking about terrorist financing activities in Iraq, Brian E. Nelson, Under Secretary of the Treasury for Terrorism and Financial Intelligence in the US stated, “By identifying Al-Huda Bank as a key money laundering channel for destabilizing terrorist activity by Iran, proposing a special measure that will sever its correspondent banking access, and imposing sanctions on their CEO, we can protect the Iraqi financial system and its legitimate businesses, as well as the international financial system, from abuse by Iran and other illicit actors.”

As further reported, Al-Huda Bank along with its international sponsors, poses a threat to the lives of US and Iraqi citizens by escalating violence. Additionally, they divert funds that could have supported legitimate business activities and the economic goals of the Iraqi people.

Demonstrating the Treasury’s dedication to collaborating with the government of Iraq to strengthen Iraq’s economy and safeguard both Iraqi & US financial systems from being exploited. Andrea Gacki, Director of FinCEN reportedly stated, “We will continue to leverage the full range of our authorities to target terrorist financing while simultaneously supporting the legitimate use of the international financial system.”

FinCEN’s Findings about Al-Huda Bank

As outlined in the findings, Al-Huda Bank has exploited its access to the US dollars to support foreign terrorist organizations (FTO), such as Iran’s Islamic Revolutionary Guard Corps (IRGC) and IRGC-Quds Force (IRGC-QF), along with Iran-aligned Iraqi militias Kata’ib Hizballah (KH) and Asa’ib Ahl al-Haq (AAH).

Furthermore, the chairman of Al-Huda Bank is reportedly involved in facilitating money laundering through front companies to obscure the resources of illegal transactions, ultimately supporting terrorist financing.

Office of Foreign Assets Control has flagged  Hamad al-Moussawi, the owner and chairman of Al-Huda, for actively supporting IRGC-QF by providing financial, materialistic, and technology support, along with goods and services.

FinCEN further reported that Al-Huda has been directed and managed by the IRGC and the IRGC-QF, since its establishment. Al-Huda Bank allows certain individuals involved in using fake documents, counterfeit Iraqi dinar, fake deposits, fake identity documents of the deceased, and fake companies, access to the US financial systems. This facilitates the concealing of transaction details from correspondent banking relationship partners.

Also read: Germany is ‘Europe’s Washing Machine’ for Criminals Facilitating Laundering of Billions of Euros Every Yea