Iraq Compliance Report

Generated 2026-09-22

Comprehensive Framework

Regulatory Overview

Regulatory Status: Dedicated crypto/VA legislation, licensing regime, active enforcement
Key Regulator(s): Bureau of Industry and Security, Central Bank of Iraq
Primary Legislation: Iraq's primary anti-money laundering law is the Anti-Money Laundering Law No. 39, For conventional financial institutions, the Company Law No. 21 of 1997 and the, The law requires financial institutions to conduct customer identification proce, Beneficial ownership requirements under Iraqi law apply to legal persons, requir, There is no sales tax or value-added tax (VAT) law in Iraq that has been interpr, There is a fundamental regulatory void: no Iraqi law, regulation, or circular ei, s paper law and practical enforcement is significant, as the CBI
Travel Rule: Not adopted
Tax Reporting: Concerns about money laundering and terrorist financing.. Protection of the national financial system and stability.. Lack of regulatory oversight and consumer protection.. Perceived speculative nature and risks to investors.. Central Bank of Iraq (CBI) - Official Statements: While direct English links to the original Arabic directives are often difficult to find, reputable news outlets have widely reported on the ban.

Key Facts

aml Decree: In February 2022 (and reiterated earlier), the Central Bank of Iraq (CBI) issued directives prohibiting the use, trading, and advertising of cryptocurrencies within Iraq. The CBI considers cryptocurrencies to be highly volatile, prone to fraud, and lacking proper regulatory oversight, posing risks to the financial system and national security. Implication: This ban means that there are no legally operating cryptocurrency exchanges or virtual asset service providers in Iraq. Any entity engaging in such activities within Iraq would be doing so illegally. Law No. 39 of 2015 – Anti-Money Laundering and Combating the Financing of Terrorism Law: This is the primary legislation. It establishes the legal framework for combating money laundering and terrorist financing across all sectors of the Iraqi financial system. It aligns with international standards set by the Financial Action Task Force (FATF). CBI Regulations: The Central Bank of Iraq issues various regulations and instructions to implement Law No. 39, applicable to banks and financial institutions under its supervision. Identification and Verification: Financial institutions (banks, money transfer services) are required to identify and verify the identity of their customers, whether natural persons or legal entities, using reliable, independent source documents, data, or information. Beneficial Ownership: Identification of the beneficial owner(s) and taking reasonable measures to verify their identity. Purpose and Intended Nature of Business Relationship: Understanding the purpose and intended nature of the business relationship. Ongoing Due Diligence: Conducting ongoing due diligence on the business relationship and scrutiny of transactions undertaken throughout the course of that relationship to ensure that the transactions are consistent with the institution's knowledge of the customer, their business, and risk profile, including, where necessary, the source of funds.
custody Regulatory Bodies: Iraq Securities Commission (ISC) Primary Legislation: Iraqi Personal Status Law, Law No. 148 of 1971 (amended). International Standing: Iraq has acceded to the 1980 Hague Convention on Civil Aspects of International Child Abduction but it is not in force between Iraq and the UK. Entities Requiring License: No specific licensing is required for parental custody. Activities Requiring Licensing: Custodian license issued to three Iraqi banks (International Development Bank, Islamic Bank of Iraq, and National Bank of Iraq) by the Iraq Securities Commission on October 20, 2022. Capital Requirements: Not applicable for parental custody. Application Process & Timeline: N/A for parental custody; bank licensing process detailed in the ISC announcement. Structural Requirements: Compliance with SEC regulations; no direct relevance to parental custody.
enforcement Original Ban Directive (2021) Regulator Name: Central Bank of Iraq (CBI) Entity Targeted: All financial institutions operating under CBI supervision, and implicitly, the general public and any platforms attempting to facilitate cryptocurrency trading or transactions within Iraq. Penalty Amount: Not a specific fine for the directive itself. Non-compliance by financial institutions could lead to severe regulatory penalties, including fines, license suspension, or revocation. Individuals could face legal prosecution under existing financial crime laws. Date: Announced in February 2021. Outcome: All licensed banks, financial institutions, and payment service providers were prohibited from dealing in cryptocurrencies. This established the legal framework making crypto activities illegal in Iraq. Al-Monitor (February 2021) - "Iraq bans cryptocurrency, citing money laundering concerns" Re-affirmation and Enhanced Warnings (2023) Entity Targeted: Financial institutions, payment companies, money transfer agencies, and the general public, with specific warnings against foreign companies operating illicitly within Iraq. Violation Type: Engaging in, promoting, or facilitating cryptocurrency transactions, deemed a breach of Iraqi financial law and a risk to the national economy and financial system. Penalty Amount: Not a specific fine for the re-affirmation. The directive reiterated that any individual or entity found dealing in cryptocurrencies would be subject to legal prosecution, implying criminal charges rather than administrative fines.
general Iraq has a ban on the trading and use of cryptocurrencies for transactions, but owning cryptocurrency is not explicitly illegal. There is no legal framework for obtaining a license to provide custodial services for digital assets, and any entity offering such services without authorization would likely be operating illegally. The Central Bank of Iraq is actively developing a central bank digital currency (CBDC), indicating an evolving regulatory landscape. Segregation of Client Assets Rules: No specific rules. As digital asset custody is not a recognized legal activity, there are no mandates regarding the segregation of client assets from firm assets. None. There are no requirements for insurance or bonding for digital asset custodians, as such entities are not legally recognized. None. No specific mandates exist for the use of cold storage or any other particular security measures for digital assets, due to the ban. None. Iraq does not define or recognize "qualified custodians" for digital assets. There is no known pending legislation specifically for cryptocurrency custody in Iraq. The current government stance is a ban, and any future legislation would first need to address a potential lifting or modification of this ban, followed by the development of a comprehensive regulatory framework for digital assets, which is not currently on the visible legislative agenda. Central Bank of Iraq (CBI) Website: The CBI is the primary financial regulator in Iraq. While the specific directive might not be easily linked, their official stance dictates financial policy.
licensing There is no dedicated cryptocurrency or digital asset licensing framework in Iraq as of 2025–2026; the Central Bank of Iraq (CBI) has issued prohibitions on crypto-related activities rather than a licensing regime Iraq export controls - Licensing The only licensing requirements that touch on digital assets are U.S. export control rules applicable to Iraq-bound items, which are administered by the U.S. Bureau of Industry and Security (BIS), not Iraqi authorities Iraq export controls - Licensing No Iraqi governmental entity currently issues licenses for cryptocurrency exchanges, wallet providers, or other virtual asset service providers (VASPs), and no entity has been licensed for such activity in Iraq Federal Register :: Export and Reexport Controls for Iraq The practical reality is that anyone engaging in cryptocurrency transactions in Iraq operates in a legal gray zone without regulatory authorization, facing potential civil and criminal liability under the central bank's prohibition stance Iraq export controls - Licensing While Iraq has general commercial and anti-money laundering laws that could apply to digital assets, no specific crypto licensing pathway or regulatory guidance has been published by Iraqi authorities Iraq - Bureau of Industry and Security The Iraqi Securities Commission (ISC) regulates capital markets and has not issued any framework for digital asset trading or initial coin offerings Federal Register :: Export and Reexport Controls for Iraq Iraq's primary anti-money laundering law is the Anti-Money Laundering Law No. 39 of 2015, administered by the Financial Intelligence Unit (FIU) within the CBI Iraq - Bureau of Industry and Security Iraq is a member of the Middle East and North Africa Financial Action Task Force (MENAFATF) and is subject to FATF mutual evaluation standards, though its FATF compliance rating has been historically low with strategic deficiencies identified Iraq export controls - Licensing
securities Iraqi Securities Commission (ISC), established under Law No. (74) of 2004 https://isc.gov.iq/en General Commission for Taxes (GCT) https://taxsummaries.pwc.com/iraq/corporate/taxes-on-corporate-income Law No. (74) of 2004 concerning the establishment and regulation of the capital market https://isc.gov.iq/en Anti-Money Laundering and Combating Financing of Terrorism Law of 2022, Article 3 defines money laundering procedures applicable to financial institutions https://taxsummaries.pwc.com/iraq/corporate/taxes-on-corporate-income International Standing: Iraq is a member of the Financial Action Task Force (FATF), adhering to global AML standards https://www.fatf-gafi.org/en/publications/Mutualevaluations/MER-Iraq-2024.html CDD, EDD, STR Reporting: Obligated for financial institutions under the Anti-Money Laundering Law; no direct reference to virtual asset platforms https://isc.gov.iq/en/pages/25 Beneficial Ownership Disclosure: Required for corporate entities registered with the ISC but not explicitly for crypto service providers https://taxsummaries.pwc.com/iraq/corporate/taxes-on-corporate-income PEP Screening: Mandatory under AML regulations, applies to all financial services https://isc.gov.iq/en/pages/25
stablecoin Central Bank of Iraq (CBI) Directives: The CBI has issued several circulars and statements prohibiting cryptocurrency activities. While direct English URLs to specific circulars on the CBI's often Arabic-only website can be challenging to find, these directives are widely reported by official Iraqi news agencies and international financial outlets. Iraq News Agency (INA): Often reports official CBI statements. Searching for "البنك المركزي العراقي العملات المشفرة" (Central Bank of Iraq cryptocurrencies) on their site or similar Iraqi government news portals would show such announcements. Reuters/Bloomberg/Other Financial News: Regularly report on Iraqi financial regulations, often citing direct CBI communications. For instance, news reports from February 2022 widely covered the CBI's reinforcement of its ban. Indirect Reference (News reporting on CBI stance): https://www.reuters.com/markets/currencies/iraq-central-bank-bans-cryptocurrency-transactions-2022-02-18/ (This article refers to a CBI circular banning crypto) Law No. 64 of 2004 - Central Bank of Iraq Law: This law establishes the CBI as the primary monetary authority with powers to regulate the financial system, issue currency, and manage monetary policy. This overarching authority underpins the CBI's power to ban unregulated financial instruments like stablecoins. Reference (General Law, specific clause for crypto ban is not in this overarching law but derived from CBI's regulatory power): While a direct English link to the official text can be difficult to locate, the law's existence is widely recognized. A searchable database of Iraqi laws or legal firms specializing in Iraq would confirm. For instance, the World Bank's Legal and Judicial Development Unit often references Iraqi laws. Law No. 40 of 2015 - Law on Payment Systems and Services: This law governs traditional and electronic payment systems and services in Iraq. While it defines "e-money" and payment service providers, stablecoins are not explicitly covered or permitted under this law, given the general ban. If stablecoins were ever to be permitted, they would likely be forced to fit within the definitions and licensing requirements of this law or a new specific framework. Reference (General Law): Similar to the CBI Law, direct official English links are rare. Legal databases or specialized law firms would provide access.
status The current legal framework in Iraq provides limited specific regulations for cryptocurrencies and digital assets, leading to uncertainty for market participants. Iraq's legal system lacks comprehensive legislation addressing cryptocurrencies and digital assets, resulting in a regulatory vacuum. No explicit licensing requirements exist for cryptocurrency exchanges or wallet providers within Iraq's current statutes. Existing financial regulations do not specifically mandate Anti-Money Laundering (AML) or Know Your Customer (KYC) procedures for digital asset transactions. Authorities have not yet taken targeted enforcement actions against cryptocurrency-related activities due to the absence of clear regulatory guidance. The Iraqi tax code does not provide explicit rules for taxing income derived from cryptocurrency transactions, leaving taxpayers in a state of ambiguity. The lack of specific regulatory oversight creates risks for investors and financial institutions, including potential exposure to illicit activities and inadequate consumer protection. Iraq: New Personal Status Code Makes Women Second ...
tax Concerns about money laundering and terrorist financing. Protection of the national financial system and stability. Lack of regulatory oversight and consumer protection. Perceived speculative nature and risks to investors. Central Bank of Iraq (CBI) - Official Statements: While direct English links to the original Arabic directives are often difficult to find, reputable news outlets have widely reported on the ban. A report by Reuters detailing the ban: https://www.reuters.com/markets/currencies/iraqi-authorities-issue-arrest-warrants-over-cryptocurrency-trading-2022-04-20/ Al-Monitor also reported on the Iraqi government's crackdown: https://www.al-monitor.com/originals/2022/05/iraq-cracks-down-crypto-trading-amid-concerns-money-laundering No specific capital gains tax for cryptocurrency. Since cryptocurrency trading is prohibited, there are no provisions for taxing gains from such activities.

Sources

This report is AI-generated from publicly available regulatory sources. Last updated: 2026-09-21. View full profile