Forex trading in Iraq exists within a complex and evolving regulatory environment. While not explicitly illegal, the practice operates in a legal grey area due to the absence of a dedicated regulatory framework. The Central Bank of Iraq (CBI) oversees foreign exchange operations, primarily focusing on currency auctions and monetary policy. In recent years, the CBI has implemented measures to enhance transparency and combat illicit financial activities, including introducing rigorous regulations for foreign currency transactions across borders.
Despite these efforts, the lack of specific legislation governing forex trading means that many brokers operate without formal oversight. This regulatory gap has led to concerns about fraud and market instability, prompting regional authorities to take action. For instance, in 2017, the Kurdistan Regional Government, guided by the CBI and Iraq's Ministry of Finance, formally banned cryptocurrency and forex trading, citing the absence of legal frameworks and the potential for financial crimes.
"Forex and USDT [cryptocurrency] companies are not authorized in the Kurdistan Region or Iraq."
The international community has also influenced Iraq's approach to forex trading. In collaboration with the U.S. Treasury, the CBI has taken steps to restrict dollar transactions to combat money laundering and the financing of terrorism. For example, in 2025, the CBI banned five local banks from engaging in U.S. dollar transactions following meetings with U.S. Treasury officials. This move aimed to curb illicit financial flows and align Iraq's financial practices with international standards.
In conclusion, while forex trading is not explicitly prohibited in Iraq, the absence of a dedicated regulatory framework creates a challenging environment for traders. Individuals interested in forex trading should exercise caution, ensure compliance with existing financial regulations, and stay informed about ongoing legal developments to mitigate potential risks.
Sources:
Iraq Business News - Central Bank Introduces Rigorous Forex Regulations (1)
964media - Erbil Bans Cryptocurrency and Forex Trading (2)
Last updated: 17-05-2025 Disclaimer: This article does not provide legal advice. If you need legal advice, please contact an attorney directly.
