Custodial wallet / SaaS in Iraq
Hosted wallet provider that holds keys on behalf of end users, often white-labeled to businesses (custody as a service).
Custodial SaaS is not permitted in Iraq.
Verdict Details
- Permitted
- no
- Local entity required
- No
- Licensing burden
- None
- Last updated
- 2026-07-13
AML Obligations
- No legal path to operate — custodial wallet / SaaS VASP activities are prohibited under the February 2022 CBI decree (and reaffirmed in 2023), which bans the use, trading, and advertising of cryptocurrencies.
- If an entity were to attempt operations illegally, Law No. 39 of 2015 (AML/CFT Law) would theoretically require CDD, beneficial ownership verification, ongoing due diligence, EDD for higher-risk customers, and STR filing with the AML/CFT Office (Iraq's FIU), but no legal basis to provide services exists.
- Record-keeping obligations (5-10 years) under the AML/CFT framework would apply to any financial institution that touches crypto-linked activity — but again, no lawful crypto activity is permitted.
Key Restrictions
- Outright ban: The CBI prohibits any dealing, use, trading, or advertising of cryptocurrencies, which covers custodial wallet/SaaS operations that hold keys on behalf of users.
- Banks, financial institutions, and payment service providers under CBI supervision are explicitly prohibited from dealing in cryptocurrencies.
- The 2023 circular reinforced the ban and warned foreign companies against operating illicitly in Iraq.
Key Risks
- Legal enforcement risk: Operating a custodial wallet/SaaS in Iraq would be illegal, exposing the operator to criminal liability under Iraqi law.
- No licensed pathway exists — there is no custody-license regime or qualified-custodian framework to apply for.
- Regulatory ambiguity is minimal (the ban is clear), but enforcement actions are not systematically publicized, creating uncertainty about the scale of penalties.
- Reputational and financial risk: association with any Iraq-linked crypto activity could trigger sanctions scrutiny or negative regulatory attention in other jurisdictions.
Evidence
This verdict synthesizes the following facts. Each fact links to its primary source(s).
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.
Original Ban Directive (2021)
Re-affirmation and Enhanced Warnings (2023)
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.
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).
Regulator Name: Central Bank of Iraq (CBI)
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.
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.
Verdict Attribution
- Source:
- AI-Generated · Unreviewed
- AI synthesized:
- 2026-07-13 (deepseek-chat)
- Last updated:
- 2026-07-13
- Confidence:
- high
This verdict was produced by an AI model from the underlying facts. Confirm with counsel before relying on it for material decisions.
Not permitted — Iraq has an outright ban on cryptocurrency use, trading, and advertising imposed by the Central Bank of Iraq (first in 2021, reiterated in February 2022 and again in 2023), with no licensed pathway for custodial wallet / SaaS operators, making any such operation illegal.
Questions this verdict aims to answer
- What custody license / qualified-custodian status applies?
- What segregation, insurance, and proof-of-reserves rules apply?
- What AML obligations attach to the SaaS vs the white-label client?