On-shore VASP in Iraq
Locally-incorporated VASP that operates under full local jurisdiction, holding all required licenses and registrations.
On-shore VASP is not permitted in Iraq.
Verdict Details
- Permitted
- no
- Local entity required
- No
- Licensing burden
- None
- Last updated
- 2026-07-13
AML Obligations
- No lawful AML obligations can be fulfilled because the activity itself is illegal — the CBI ban prohibits any VASP activity.
- If operating illegally, entities would face investigation under Law No. 39 of 2015 (AML/CFT law) and the CBI's directives.
- Traditional FIs in Iraq are subject to CDD, EDD, STR reporting to the Iraqi AML/CFT Office (FIU), and record-keeping under Law No. 39 — but these obligations apply to licensed financial institutions, not VASPs, which cannot be licensed.
Key Restrictions
- Outright prohibition: The Central Bank of Iraq issued a ban on cryptocurrency use, trading, and advertising in February 2021, reaffirmed in February 2023.
- All financial institutions under CBI supervision are prohibited from dealing in cryptocurrencies.
- No licensing or registration pathway exists for VASPs — there is no legal way to operate as an on-shore VASP in Iraq.
- Any entity engaging in crypto activities within Iraq would be doing so illegally and subject to legal consequences.
Key Risks
- Criminal liability: Engaging in crypto activities is illegal under CBI directives, and violators may face arrest and prosecution.
- No regulatory pathway: There is no licensing regime, no application process, and no prospect of legal compliance for VASPs.
- Enforcement actions include legal warnings to banks, financial institutions, and the public; arrests have been reported for crypto trading.
- Tax treatment is irrelevant — since the activity is illegal, any income from crypto is not recognized as legitimate income.
- Lack of transparency around enforcement details makes it difficult to assess specific penalty exposure.
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.
No specific income tax for cryptocurrency. Income derived from crypto-related activities (e.g., mining, staking, trading profits) would not be recognized as legitimate income for tax purposes because the underlying activity is illegal.
No specific capital gains tax for cryptocurrency. Since cryptocurrency trading is prohibited, there are no provisions for taxing gains from such activities.
Crypto-Specific Tax Legislation:
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.
No — On-shore VASP operation is not permitted in Iraq. The Central Bank of Iraq has imposed a blanket prohibition on cryptocurrency use, trading, and advertising since 2021 (reaffirmed in 2023), with no licensing or registration pathway available for virtual asset service providers.
Questions this verdict aims to answer
- What license(s) are required to operate locally?
- What capital, governance, and reporting obligations apply?
- What is the application process and timeline?