Iraqi security forces dismantle network using e-payment cards for ‘illegal money transfers​’

BAGHDAD — Iraqi security forces have dismantled an ‘illegal financial network’ that was using digital payment cards to transfer money outside Iraq, arresting six suspects in Baghdad’s Karkh district. The Federal Intelligence and Investigations Agency, part of the Iraqi Ministry of Interior, confirmed the arrests and seizure in a statement. “Six suspects were arrested who were holding 500 digital payment cards, two handguns, two rifles, and other materials used in the illegal operations were all seized,” the agency reported.

“The suspects have been handed over to the relevant authorities for further investigation and prosecution,” the statement added.

Iraq has been confronting challenges related to organized crime and illegal financial networks for years. These groups often exploit discrepancies between the country’s formal and informal exchange rates, employing methods such as hawala (an informal money transfer system) and electronic payment cards to move large sums of money across borders without detection.

Kaifi Khoshnaw, a spokesperson for Erbil’s currency exchange market, detailed the scheme to 964Media. “Criminal networks are exploiting Iraqis by purchasing electronic payment cards, loading them with large sums of Iraqi dinars, and smuggling them to the UAE and Turkey through airports. Once abroad, they withdraw the sums in U.S. dollars at a formal rate and transfer the money back to Iraq, where they exchange it at an informal rate—often 18,000 IQD higher per $100 than the official rate. This is how they profit from this illegal scheme,” Khoshnaw explained.

The issue of electronic payment card misuse is widespread, affecting many Iraqi consumers who use e-payment platforms licensed by the Central Bank of Iraq, such as AsiaHawala, Zain Cash, NassWallet, FastPay, Iraqi First Bank, and Rafidain Bank.

A PhD student from Sulaymaniyah recounted his personal experience with this issue to 964Media. After applying online for an electronic payment card from Rafidain Bank, Abdullah* never received the card. However, three months later, he received an SMS informing him that 500,000 IQD had been loaded onto the card. “At first, I thought it was a mistake and waited for the sender to contact me to return the money. But two days later, I received another SMS saying that the amount had been withdrawn in Dubai,” Abdullah said. Alarmed, he immediately contacted the bank to cancel the card, fearing further misuse.

The Central Bank of Iraq highlighted the severity of this problem on Jan. 25, noting a recent surge in the misuse of electronic payment cards that “is harming the financial and banking sectors as well as their customers.” This issue has been identified through reports from relevant security agencies and the oversight measures of the bank’s Anti-Money Laundering and Counter-Terrorism Financing Office.

*Names have been changed