The Central Bank of Iraq (CBI) banned eight local banks from making US dollar transactions on 4 February, in an attempt to avoid sanctions and US financial restrictions.

A CBI document lists the banned banks as Ahsur International Bank for Investment, Investment Bank of Iraq, Union Bank of Iraq, Kurdistan International Islamic Bank for Investment and Development, Al-Huda Bank, Al-Janoob Islamic Bank for Investment and Finance, Arabia Islamic Bank, and Hammurabi Commercial Bank.

"We commend the continued steps taken by the Central Bank of Iraq to protect the Iraqi financial system from abuse, which has led to legitimate Iraqi banks achieving international connectivity through correspondent banking relationships,” a US Treasury Department spokesman said on Sunday.

The measures come after Iraqi officials met with the US Treasury Department’s top sanctions official Brian Nelson last week.

The Finance Committee in the Iraqi parliament made a statement on 31 January calling for the sale of oil in currencies other than the US dollar, aiming to counter US sanctions on the Iraqi banking system.