Iraq -- Enforcement Actions Regulatory Overview

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.

Date: Issued a circular to banks and financial institutions in February 2023.

Outcome: Reinforced the existing ban, explicitly stating that using or dealing with cryptocurrencies is against Iraqi law and that violators would face legal consequences. It aimed to shut down any perceived loopholes or illicit operations. This was a significant re-emphasis of the country's hardline stance.

Reuters (February 2023) - "Iraq central bank reiterates crypto ban, warns of legal consequences"

Blanket Ban: Because crypto is outright banned, enforcement tends to fall under broader financial crime or anti-money laundering laws rather than specific crypto-related administrative fines.

Lack of Transparency: Iraqi authorities generally do not publicly disclose details of individual arrests, investigations, or specific financial penalties related to cryptocurrency violations in a systematic or easily accessible manner, especially to international observers.

Focus on Prevention: The primary "enforcement" has been through strong warnings and directives to prevent engagement rather than publicized actions against a large number of violators.

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INL pursued limited law enforcement programming with the Department of Justice’s International Criminal Investigative Training Assistance Program (DOJ/ICITAP) in 2017 to increase capacity within the Iraq Ministry of Interior. (topic: INL DOJ/ICITAP Program in Iraq (2017); quote: "In 2017 INL pursued limited law enforcement programming with the Department of Justice’s International Criminal Investigative Training Assistance Program (DOJ/ICITAP) to deliver a program designed to increase capacity within the Iraq Ministry of Interior in four areas: 1) Crime Scene Management and Forensic Services; 2) Organized Crime Investigations, 3) Internal Affairs; and 4) Specialized Training Management.") [https://2017-2021.state.gov/bureau-of-international-narcotics-and-law-enforcement-affairs-work-by-country/iraq-summary/]

INL partnered with the United Nations Office on Drugs and Crime (UNODC) in 2018 to support a program that strengthens the capacity of Iraqi law enforcement and criminal investigation Services. (topic: INL UNODC Partnership (2018); quote: "In 2018, INL partnered with the United Nations Office on Drugs and Crime (UNODC) to support a program to strengthen the capacity of Iraqi law enforcement and criminal investigation Services.") [https://2017-2021.state.gov/bureau-of-international-narcotics-and-law-enforcement-affairs-work-by-country/iraq-summary/]

Iraqi authorities seize $6M, MPs call for equal enforcement

Iraq's regulatory framework for law enforcement is outlined in various statutes and decrees issued by the Iraqi government, including the Law on Combating Money Laundering (Law No. 26 of 2014) and the Decree-Law No. 58 of 2006 concerning the prevention of terrorist financing.

The Competition Council has issued a procedural guide on mergers and restrictive practices, enhancing the enforcement of antitrust laws to promote fair competition. Competition Council Issues Procedural Guide on Mergers

Licensing for businesses in Iraq often requires approval from the Iraqi State Regulations Services (ISRS), which ensures compliance with national laws and standards. Iraqi State Regulations Services

Specific industries, such as financial services, may require additional licenses from regulatory bodies like the Central Bank of Iraq and the General Tax Authority. General Tax Authority | IMOF

The Law on Combating Money Laundering mandates that financial institutions implement robust Anti-Money Laundering (AML) and Know Your Customer (KYC) procedures.

Financial institutions are required to conduct due diligence on clients, monitor transactions for suspicious activities, and report any suspected money laundering to the relevant authorities. Iraq – KnowYourCountry

Recent enforcement actions include increased scrutiny of financial transactions by the Iraqi State Regulations Services and collaboration with international agencies such as the Financial Action Task Force (FATF) to combat money laundering. Iraq – KnowYourCountry

The Ministry of Interior has launched initiatives to enhance police capabilities in investigating narcotics trafficking and other criminal activities. Law enforcement in Iraq

The General Tax Authority administers various taxes, including corporate income tax, value-added tax (VAT), and customs duties, ensuring compliance through rigorous enforcement mechanisms. General Tax Authority | IMOF

Corporate entities in Iraq are subject to a progressive corporate income tax rate, with additional taxes applicable under specific circumstances such as excessive profit extraction. Iraq - Corporate - Other taxes - Worldwide Tax Summaries

A notable gap in enforcement is the limited capacity of local regulatory bodies to monitor and enforce compliance across all sectors, particularly in remote or conflict-affected regions.

Risks include potential non-compliance with international standards due to insufficient resources and training, as well as the proliferation of illicit financial activities facilitated by weak oversight. Iraq – KnowYourCountry

Competition Council Issues Procedural Guide on Mergers

Iraq - Corporate - Other taxes - Worldwide Tax Summaries

Legal Basis: Taxes are levied under federal laws, with specific decrees addressing sector-specific tax obligations. The Personal Income Tax Law and Corporate Income Tax Law are the primary statutes governing taxation.