Iraq
Retail_Trading_Status
- Analysis ID
- #691
- Version
- Latest
- Created
- 2025-12-12 04:39
- Run
- ae4f24ac...
- History
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- Workflow Stage
- Step 1
Executive Summary
Retail cryptocurrency trading is illegal in Iraq, with a strict prohibition enforced by the Central Bank of Iraq (CBI) and the Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) Office. While there is no standalone 'Anti-Crypto' statute, authorities effectively criminalize the activity using the 2015 AML Law, viewing crypto assets as vehicles for financial crime and capital flight. The ban is actively enforced, with security agencies conducting raids, seizing mining equipment, and arresting individuals involved in trading or promotion.
Key Pillars
Central Bank of Iraq (CBI) - Primary Regulator issuing prohibitory circulars
Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) Office - Enforces compliance under AML Law No. 39
National Security Agency (INSS) - Conducts raids and arrests related to crypto mining and trading networks
Kurdistan Regional Government (KRG) Ministry of Interior - Enforces bans within the Kurdistan region
Landmark Laws
Anti-Money Laundering and Counter-Terrorist Financing Law (Law No. 39 of 2015) - Enacted: 2015-10-01
- The primary legal instrument used to prosecute crypto activity. Article 36 is frequently cited to impose penalties on those dealing in virtual assets, categorizing them as illicit financial flows.
- Source
CBI Circular on Virtual Assets (Circular No. 125/5/9) - Enacted: 2021-11-22
- Explicitly prohibits banks, non-bank financial institutions, and payment providers from engaging in any cryptocurrency transactions or facilitating payments for them.
- Source
CBI Directive on FATF Alignment (N/A) - Enacted: 2022-03-26
- Reaffirmed the ban to align with FATF recommendations, mandating enhanced due diligence to detect and block crypto-related transactions.
KRG Security Council Directive (N/A) - Enacted: 2025-04-09
- A directive in the Kurdistan region banning all cryptocurrency and forex trading, warning that violators (individuals and companies) face arrest.
Considerations
Criminal Prosecution: Individuals caught trading or mining face arrest under AML laws, not just civil penalties.
Mining Crackdowns: The government actively raids locations with high electricity usage to confiscate mining rigs (e.g., 5,000 rigs seized in 2023, further busts in 2025).
Banking Blockade: Banks are strictly forbidden from processing transfers to known crypto exchanges; using cards for such transactions is a violation of CBI rules.
Regional Consistency: Both Federal Iraq and the Kurdistan Region (KRG) maintain aligned, strict prohibitions.
Notes
The analysis reflects the status as of late 2025, showing a continued and intensifying crackdown compared to earlier years. The mention of a 'digital currency' pilot by the CBI in some reports refers to a potential Central Bank Digital Currency (CBDC), which is distinct from and often cited as a reason for banning private cryptocurrencies.
Remaining Uncertainties
- Whether mere possession (holding) without trading or mining is actively prosecuted in practice, or if enforcement focuses solely on active traders and miners.
- The specific legal threshold used to distinguish between a 'victim' of a crypto scam and a 'perpetrator' of an illegal transaction under AML laws.
Detailed Explanation
Detailed Explanation
Retail cryptocurrency trading is illegal and strictly banned in Iraq. The prohibition is enforced by the Central Bank of Iraq (CBI) and the Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) Office, which view crypto assets as vehicles for financial crime and capital flight. While there is no standalone 'Anti-Crypto' statute, authorities effectively criminalize the activity using the Anti-Money Laundering and Counter-Terrorist Financing Law (Law No. 39 of 2015), enacted on 2015-10-01. Article 36 of this law is frequently cited to impose penalties on those dealing in virtual assets, categorizing such activities as illicit financial flows. The regulatory framework is further solidified by the CBI's Circular on Virtual Assets (Circular No. 125/5/9), enacted on 2021-11-22, which explicitly prohibits banks, non-bank financial institutions, and payment providers from engaging in or facilitating any cryptocurrency transactions. A subsequent CBI Directive on FATF Alignment from 2022-03-26 reaffirmed this ban to align with international recommendations, mandating enhanced due diligence to detect and block crypto-related transactions. The ban is actively enforced by security agencies, including the National Security Agency (INSS), which conducts raids to seize mining equipment and arrest individuals involved in trading or promotion. The Kurdistan Regional Government (KRG) Ministry of Interior aligns with this federal stance, as demonstrated by a KRG Security Council Directive from 2025-04-09 that bans all cryptocurrency and forex trading in the region, warning of arrest for violators. Consequently, individuals face criminal prosecution under AML laws, not just civil penalties, and a complete banking blockade prevents transfers to known crypto exchanges. The analysis reflects a continued and intensifying crackdown as of late 2025, with government actions including the seizure of thousands of mining rigs.
Summary Points
I. Regulatory Status
* Retail cryptocurrency trading is illegal and strictly banned in Iraq.
* The ban is actively enforced, with individuals facing criminal prosecution under anti-money laundering laws.
* Both Federal Iraq and the Kurdistan Region (KRG) maintain aligned, strict prohibitions.
II. Key Regulatory Bodies
* Central Bank of Iraq (CBI): The primary regulator issuing prohibitory circulars and directives.
* Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) Office: Enforces compliance and prosecutes crypto activity under the AML Law.
* National Security Agency (INSS): Conducts raids, seizes mining equipment, and arrests individuals involved in crypto networks.
* Kurdistan Regional Government (KRG) Ministry of Interior: Enforces the ban within the Kurdistan region.
III. Important Legislation
* Anti-Money Laundering and Counter-Terrorist Financing Law (Law No. 39 of 2015):
* Enacted: 2015-10-01.
* The primary legal instrument used to prosecute crypto activity; Article 36 is frequently cited to impose penalties.
* CBI Circular on Virtual Assets (Circular No. 125/5/9):
* Enacted: 2021-11-22.
* Explicitly prohibits banks, non-bank financial institutions, and payment providers from engaging in or facilitating cryptocurrency transactions.
* CBI Directive on FATF Alignment:
* Enacted: 2022-03-26.
* Reaffirmed the ban to align with FATF recommendations, mandating enhanced due diligence to block crypto transactions.
* KRG Security Council Directive:
* Enacted: 2025-04-09.
* Bans all cryptocurrency and forex trading in the Kurdistan region, warning of arrest for violators.
IV. Compliance Requirements
* Financial institutions must implement enhanced due diligence to detect and block crypto-related transactions as per the 2022 CBI directive.
* All regulated entities must strictly adhere to the prohibition on dealing with or facilitating virtual asset transactions outlined in CBI Circular No. 125/5/9.
V. Notable Restrictions or Limitations
* Banking Blockade: Banks are strictly forbidden from processing transfers to known crypto exchanges; using bank cards for such transactions is a violation.
* Criminal Prosecution: Individuals caught trading or mining face arrest under AML laws.
* Mining Crackdowns: The government actively raids locations with high electricity usage to confiscate mining rigs (e.g., 5,000 rigs seized in 2023).
VI. Recent Developments or Notes
* As of late 2025, the regulatory crackdown is continued and intensifying compared to earlier years.
* Government security agencies conducted further busts of crypto mining and trading networks in 2025.
* Mentions of a 'digital currency' pilot by the CBI refer to a potential Central Bank Digital Currency (CBDC), which is distinct from and often cited as a reason for banning private cryptocurrencies.
Full Analysis Report
Full Analysis Report
The regulatory status of cryptocurrency in Iraq is characterized by a comprehensive ban, enforced through a combination of Central Bank circulars and anti-money laundering legislation. The Central Bank of Iraq (CBI) has maintained a hostile stance since at least 2017, citing extreme volatility, lack of consumer protection, and the potential for terrorism financing. This stance was formalized in November 2021 with Circular No. 125/5/9, which explicitly forbade all supervised financial institutions from dealing in virtual assets. Unlike 'Gray-Zone' jurisdictions where a banking ban exists without criminal penalties for individuals, Iraqi authorities have taken the step of criminalizing the activity for end-users and traders under the umbrella of the Anti-Money Laundering and Counter-Terrorist Financing Law No. 39 of 2015.
Enforcement has been rigorous and physical. In 2025, reports confirmed that the National Security Agency dismantled multiple cryptocurrency mining and money laundering networks across provinces like Nineveh, Wasit, and Baghdad, seizing hardware and arresting suspects. Similarly, the Kurdistan Regional Government (KRG) issued strict directives in April 2025 banning all forms of crypto dealing, with security forces in Erbil and Duhok arresting individuals involved in trading schemes. These actions demonstrate that the ban extends beyond financial institutions to direct police action against private citizens and informal networks.
While no specific 'Anti-Cryptocurrency Act' exists in the penal code, the legal interpretation by the CBI and the Judiciary treats cryptocurrency transactions as inherently suspicious and often fraudulent or linked to money laundering. Consequently, traders are prosecuted under the broad provisions of the AML law, which carries severe penalties including imprisonment and heavy fines. The CBI has also linked its prohibition to compliance with FATF recommendations, viewing the opacity of crypto assets as incompatible with Iraq's efforts to exit international financial monitoring lists.
Despite the ban, an underground market persists, primarily using P2P methods and stablecoins (USDT) to hedge against Iraqi Dinar inflation. However, this activity is high-risk. The Trade Bank of Iraq and other financial entities have implemented strict monitoring to block crypto-related payments, and the government has launched public awareness campaigns warning that dealing in digital currencies is a crime. The environment is one of zero tolerance, with no legal avenues for retail investors to operate.
The regulatory status of cryptocurrency in Iraq is characterized by a comprehensive ban, enforced through a combination of Central Bank circulars and anti-money laundering legislation. The Central Bank of Iraq (CBI) has maintained a hostile stance since at least 2017, citing extreme volatility, lack of consumer protection, and the potential for terrorism financing. This stance was formalized in November 2021 with Circular No. 125/5/9, which explicitly forbade all supervised financial institutions from dealing in virtual assets. Unlike 'Gray-Zone' jurisdictions where a banking ban exists without criminal penalties for individuals, Iraqi authorities have taken the step of criminalizing the activity for end-users and traders under the umbrella of the Anti-Money Laundering and Counter-Terrorist Financing Law No. 39 of 2015. Enforcement has been rigorous and physical. In 2025, reports confirmed that the National Security Agency dismantled multiple cryptocurrency mining and money laundering networks across provinces like Nineveh, Wasit, and Baghdad, seizing hardware and arresting suspects. Similarly, the Kurdistan Regional Government (KRG) issued strict directives in April 2025 banning all forms of crypto dealing, with security forces in Erbil and Duhok arresting individuals involved in trading schemes. These actions demonstrate that the ban extends beyond financial institutions to direct police action against private citizens and informal networks. While no specific 'Anti-Cryptocurrency Act' exists in the penal code, the legal interpretation by the CBI and the Judiciary treats cryptocurrency transactions as inherently suspicious and often fraudulent or linked to money laundering. Consequently, traders are prosecuted under the broad provisions of the AML law, which carries severe penalties including imprisonment and heavy fines. The CBI has also linked its prohibition to compliance with FATF recommendations, viewing the opacity of crypto assets as incompatible with Iraq's efforts to exit international financial monitoring lists. Despite the ban, an underground market persists, primarily using P2P methods and stablecoins (USDT) to hedge against Iraqi Dinar inflation. However, this activity is high-risk. The Trade Bank of Iraq and other financial entities have implemented strict monitoring to block crypto-related payments, and the government has launched public awareness campaigns warning that dealing in digital currencies is a crime. The environment is one of zero tolerance, with no legal avenues for retail investors to operate.
Source Evidence
Primary and secondary sources cited in this analysis
"The Central Bank of Iraq warns against dealing with digital currencies... due to the high risks associated with them... and their use in criminal operations."
"Article 36: Punishes with imprisonment and a fine... anyone who commits the crime of money laundering."
"Non-compliance triggers enforcement actions including punitive measures against institutions and individual actors."
"Violators—including individuals and companies—would face legal consequences, including arrest."
"The National Security Agency dismantled cryptocurrency mining and money laundering networks... arresting multiple suspects."
Web Sources (9)
Sources discovered via web search grounding
Search queries used (5)
- Central Bank of Iraq circular prohibiting cryptocurrency
- Is bitcoin trading legal in Iraq for individuals
- Central Bank of Iraq cryptocurrency regulation status 2024 2025
- Iraq Anti-Money Laundering Office crypto ban
- Iraq crypto arrests 2023 2024
https://www.lightspark.com/knowledge/is-crypto-legal-in-iraq
https://blog.upay.best/crypto-adoption/iraq/
https://en.964media.com/34722/
https://channel8.com/english/news/30616
https://proeliumlaw.com/cryptocurrency-regulation-tracker/
https://shafaq.com/en/Economy/Duhok-arrests-2-in-15M-cryptocurrency-fraud
https://alnesoor.com/posts/cryptocurrencies-in-iraq?locale=en
https://freemanlaw.com/cryptocurrency/iraq-and-cryptocurrency/
https://shafaq.com/en/Security/Iraq-security-roundup-Tribal-clash-kills-officers-ISIS-raid-crypto-bust