A Reserve Bank of Australia subsidiary secretly met officials from Saddam Hussein's Iraqi government, at the height of international sanctions, to discuss a possible banknote deal.

Note Printing Australia (NPA) confirmed on Friday night that two of its executives travelled to Baghdad in 1998, at the request of the Iraqi regime, to meet senior representatives from the Central Bank of Iraq, Fairfax newspapers report.

At the time of the meetings, the RBA was charged with implementing United Nations sanctions against Saddam's regime, including bans on financial dealings with the Iraq government, its agencies and citizens.

Australian wheat exporter AWB was also in close contact with Saddam's administration at the time and was later found to have funnelled $300 million in kickbacks to Iraq under the UN oil-for-food program.

The revelation of the RBA's dealings with Saddam's government comes after the Australian Federal Police was asked to investigate the overseas activities of another RBA subsidiary, Securency.

In a statement on Friday night, NPA chairman and assistant Reserve Bank governor Robert Rankin said: "The NPA representatives made clear to the Iraqi authorities that they believed NPA could not supply banknotes to Iraq while the United Nations sanctions were in place."

AAP