They made half a billion in a year… e-cards become a “dollar smuggler” after the remittance loophole was closed in Iraq.
Revealed details that led to reducing the ceiling on withdrawals and spending from electronic cards outside Iraq And many of them were also stopped, noting that there was a jump of about 3000% in MasterCard and Visa Card transactions in Iraq, as a result of armed factions and dollar smuggling entities resorting to…Iran…by resorting to these cards after losing the financing loophole through import transfers.
The newspaper said, “Just two years ago, the Iraqi market represented a marginal value for my company. “Visa Mastercard, which was generating less than $50 million per month in cross-border transactions at the beginning of 2023, saw its value explode to nearly $1.5 billion in April of the same year, an increase of nearly 2,900% in a short period.
The newspaper indicates that what has changed, according to American and Iraqi officials and documents, is that armed factions were extracting dollars through these cards, via the payment networks affiliated with Visa and MasterCard, after they were closed. Department of the Treasury The US uncovered a major loophole that was being used to fraudulently obtain dollars via foreign transfers.
The newspaper explained that the factions found a plan to use electronic payment cards after this loophole was closed, but The treasury Card-issuing companies reported that armed groups were involved in the use of these cards. It took months for the companies to reduce financial transactions. These transactions declined, but remained between $400 million and $1.1 billion per month until the beginning of this year. The Central Bank even set a maximum of $300 million per month recently to control these payments.
The newspaper explained that due to the existence of an official and an unofficial rate, people were buying electronic cards and then withdrawing the funds from dollars outside. Iraq In other Middle Eastern countries, the money is exchanged at the official rate. They then send the funds back to Iraq to be converted into dinars at the market rate, earning profits of up to 21%. The result has been a thriving business for powerful Iraqi factions.
The newspaper confirms that Visa and Mastercard made profits from these transactions, ranging between 1% and 1.4%. It is estimated that Iraqi cardholders participating in this scheme made profits of approximately $450 million in 2023 alone, while foreign cards collected $120 million alone. Revenues are estimated to have grown by 60% in 2024.
The newspaper says that in recent days, the Treasury Department has officially requested Central Bank of Iraq More than 200,000 cards have been blocked by faction members over fraud concerns, as officials begin…Federal Reserve The US Treasury Department demanded that Visa and Mastercard explain the increase in transactions in Iraq in 2023. They held regular meetings on the Iraqi market, including with officials from the Central Bank of Iraq in 2024 and early this year, and card companies began taking concrete action in March.
Dollar window sales in the first quarter of 2025 were 5% higher than last year.
Data revealed Central Bank of Iraq… about a rise in dollar sales during the first quarter of this year by more than 5% compared to the same period last year (2024), exceeding $20 billion.
According to data provided by the economic researcher Manar Al-Abidi The Central Bank’s foreign exchange sales for the first quarter of 2025 amounted to $20.8 billion, a 5.2% increase compared to the same period in 2024, which amounted to $19.76 billion.
He explained that “cash sales amounted to $814 million, while international settlements (electronic cards) amounted to $2.934 billion, while bank balance reinforcements amounted to $17.05 billion, while direct transfers were worth $0, due to the shutdown of the electronic remittance platform.”
In March, the Central Bank’s foreign currency sales declined to only $5.796 billion, distributed among cash sales of $184 million, international settlements of $777 million, and bank balance reinforcements of $4.835 billion.
The Central Bank’s dollar sales rates during this year are expected to remain at the same level as last year’s sales at $77.65 billion, with a slight increase expected.
A “black” trick and banking loophole generate millions of dollars for Iraqi factions.
A US report revealed that Iranian-backed Iraqi militias have been exploiting a loophole in the Iraqi banking system, namely Visa and MasterCard, to withdraw dollars from Iraq. Transactions have rapidly increased to $1.5 billion per month.
A report by the American newspaper “The Wall Street Journal,” translated by Shafaq News Agency, explained that loopholes and weak oversight have allowed the militias to benefit from manipulating the credit card system. It added that the small market that appeared for Visa and Mastercard in early 2023 has suddenly transformed into a financial transfer operation worth $1.5 billion per month. American and Iraqi officials say that behind it stand Iranian-backed militias exploiting American payment systems to circumvent sanctions and reap huge profits.
Noting that “a new loophole has replaced the old one,” the report explained that after the US Treasury and the Federal Reserve Bank of New York halted fraudulent international bank transfers conducted by Iraqi banks in late 2022, Iraqi militias quickly shifted to using another mechanism, namely Visa and Mastercard credit and prepaid cards.
The report noted that the card system emerged with the dismantling of the previous system of bank transfers, which lacked anti-money laundering controls. This flawed system was introduced by the United States after the Iraq War and allowed militias and Iran access to billions of dollars. It added that the sudden shift to bank cards occurred almost immediately after the shutdown of that tap.
The report stated that by mid-2023, cross-border transactions using Iraqi cards had increased by nearly 3,000%, indicating that a significant portion of this volume was related to the exploitation of the gap between the official exchange rate and its high black market rate.
The report explained that the militias and their partners load the cards in Iraq, then use them to withdraw dollars from neighboring countries. They then return the cash to Iraq and exchange it for dinars at a profit that has sometimes reached 21%.
The report quoted officials as saying that the profits were substantial, with cardholders linked to the militias generating an estimated $450 million in profits in 2023 alone from this fraud. They added that Visa and Mastercard, which charge fees on international transactions, together generated approximately $120 million from these practices.
According to the report, despite repeated warnings from the US Treasury Department since mid-2023, Visa and Mastercard delayed taking action for several months. It added that after Treasury officials revealed that individuals linked to militias were flooding ATMs in Dubai with their Iraqi bank cards, the two companies postponed major action until March 2024.
In addition, the report noted that the militias have expanded their operations by using fictitious transactions with foreign merchants, point-of-sale devices that operate via VPNs, and smuggling networks to transfer money.
According to the report, some merchants accepted fake purchases in exchange for cash, a portion of which was returned to the seller, while others helped launder these transactions through jewelry stores and shops in free trade zones in the UAE and Turkey.
Additionally, the report stated that Iraqi government-backed cards were also used, as Qi cards, designated for paying the salaries of government employees and militia members, were a key part of the fraud scheme. Militias seized the cards of ordinary fighters, and the names of fictitious employees were inserted onto payrolls to obtain more cards, which were then used in this transaction cycle.
Under mounting pressure, Mastercard and Visa finally implemented sweeping measures in early 2024, according to the Wall Street Journal. Mastercard cancelled more than 100,000 cards and removed 4,000 UAE merchants from its network. Visa followed suit, identifying 70,000 suspected fraudulent cards and temporarily banning thousands of foreign sellers.
The US report indicated that Iraqi regulatory authorities imposed a monthly maximum of $300 million on cross-border transactions, and a maximum limit of $5,000 per cardholder.
In addition, the report noted that the Central Bank of Iraq hired a New York-based financial crimes firm to monitor the system and required all card issuers to operate through banks with correspondent relationships with the United States, while many Iraqi card issuers were excluded from the Visa and Mastercard networks.
The US report noted that the Treasury Department blacklisted three card companies suspected of having ties to militias, including a company affiliated with the Imam Abbas Shrine in Karbala, a major destination for Iranian pilgrims.
He considered this case to reveal significant weaknesses in global payment systems, particularly in fragile or poorly regulated markets. He noted that Iraq’s economy remains heavily reliant on cash transactions, while oversight is weak. The transition to digital payments occurred without adequate safeguards, allowing armed groups subject to US sanctions to exploit Western infrastructure to circumvent restrictions.
He concluded that despite Visa and Mastercard’s assertions of their rapid response and strong cooperation with authorities, US and Iraqi officials believe the companies’ delay allowed the fraud to expand and reach billions of dollars.
The Wall Street Journal report concluded by noting that while the United States seeks to preserve the global integrity of the dollar and strengthen the implementation of sanctions, the Iraqi payment system and the companies operating within it have become a stark warning of what can happen when financial innovations bypass oversight.
Al-Sudani’s advisor: Increasing foreign reserves boosts market confidence in Iraq’s monetary policy
The financial advisor to the Prime Minister, Mazhar Mohammed Salih, confirmed on Monday that there is a direct proportional relationship between the current account surplus of the balance of payments and the development of the Central Bank’s foreign currency reserves, noting that this surplus has been positively reflected in the increase in foreign currency reserves during the current year.
Salih told Al-Maalouma Agency, “Achieving a surplus in the current account of the balance of payments during the current year was directly reflected in the increase in the Central Bank’s foreign currency reserves, as the reserve recorded an increase of more than 20% compared to 2020.”
He added, “This accumulation of reserves enhances the foreign currency coverage of the base currency and provides the monetary policy of the Central Bank of Iraq with a powerful tool to confront inflationary pressures and support monetary and economic stability.
” Salih continued, “The strength of the current foreign reserve gives the Central Bank a comfortable and effective ability to intervene in the exchange market, through open monetary policy tools, in a way that maintains the stability of the exchange rate and enhances the purchasing power of the Iraqi dinar.”
Sudanese orders on selling prices after dollar stabilization
On Monday, Iraqi Prime Minister Mohammed Shia al-Sudani directed the departments responsible for combating economic crime to pursue and hold accountable those who manipulate prices, particularly food and medicine vendors, bakeries, and ovens, given the “stability of the dollar exchange rate against the Iraqi dinar.”
According to the directive, which Shafaq News Agency has seen, it included: “Given the stability of the exchange rate (dollar) against the Iraqi dinar, it has been observed that some companies, traders and weak-willed individuals are exploiting prices or keeping them as they were without taking into account the stability in the markets, especially food and medicine owners, bakeries and ovens, due to their failure to adjust the selling prices of the materials that citizens need on a daily basis, as there is no clear oversight role by the economic departments to follow up on these cases.”
The directive also stated that, “After the Prime Minister reviewed the above content, he ordered the departments responsible for combating economic crime to monitor and hold accountable those who manipulate prices, take the necessary legal action against them, and coordinate with the Ministries of Commerce, Agriculture, and Health to ensure the stability of the price ratio of items that affect citizens’ lives on a regular basis.”
The Iraqi currency: a document that attracts tourists and investors.
Currency has played a significant role in regulating economic and political life in Iraq, with its forms and symbols evolving over the ages, all the way to the modern era. It has become an essential part of the national and international economic structure, and with Baghdad being designated the Arab Capital of Tourism, it represents a means of attracting tourist investors.
The Iraqi currency has undergone many transformations, as historian Dr. Adel Shaker explains in a statement to Al-Sabah: “Commercial transactions in Iraq were based on a commodity exchange system, with commodities such as wheat, sheep, and vegetables being exchanged before they were regulated by written laws. These laws were written in cuneiform script, protected the rights of merchants, and regulated exchange operations.”
He emphasized that over time, currencies evolved and diversified in their forms. Gold and silver coins appeared bearing important slogans, such as “There is no god but God, Muhammad is the Messenger of God” or “Ali is the guardian of God.” They immortalized the names of kings and historical events, especially in regions such as the city of Hatra in northern Iraq, which went through multiple political phases. Its kings placed slogans expressing their beliefs and deities, such as the sun god.
The system was initially disorganized, until laws intervened to regulate these processes. Priests controlled the temple and regulated religious, social, and political life. They wrote down laws on cuneiform tablets, which are now part of museums and illustrate ancient trade operations.
Shaker explained that the beginnings of the use of currency in Iraq date back to the First World War, when Iraq was part of the Indian monetary region, and the Indian rupee was used as legal tender during that period until the year 1932. In the year 1931, the Iraqi Currency Committee was established pursuant to Law No. (44) of 1931, then it was abolished and the National Bank of Iraq was established pursuant to Laws No. (42, 43) of the year (1947) to undertake the issuance of currency.
Pointing out that the Iraqi currency went through several stages, namely the royal edition bearing the image of King Faisal, which continued until 1958, the edition bearing the republican emblem until 1978, and the international edition called (the Swiss edition), which was printed by the British company Delao and the Soviet Exportless until 1990. As a result of the economic blockade that Iraq went through, the Central Bank of Iraq printed banknotes at the Al-Nahrain Printing House, which did not meet security specifications and were made of plain paper. In early 2003, the Central Bank withdrew all local and international banknotes called the Swiss edition, and introduced the new series of Iraqi dinars, consisting of seven denominations, which were printed with high security specifications, and continued to be developed.