Loading ...Needing Dollars, Iran-Backed Militias Turn to Visa and Mastercard
Iraq was a minor market for Visa and Mastercard a couple of years ago, generating just $50 million a month or less in cross-border transactions at the start of 2023. Then it exploded to around $1.5 billion in April that year, a 2900% increase almost overnight.
What changed? Iraqi militia groups figured out how to squeeze dollars on an industrial scale from Visa and Mastercard’s payment networks for themselves and for their allies in Iran, according to U.S. and Iraqi officials and documents reviewed by The Wall Street Journal.
The shift into cards came after the U.S. Treasury and the Federal Reserve Bank of New York in late 2022 shut down a gaping loophole being used for fraud—international wire transactions by Iraqi banks that lacked money-laundering safeguards. Flaws in that system, created by the U.S. during the occupation of Iraq, allowed Iran and the militia groups it supports to access billions of dollars over more than a decade.
After the U.S. finally closed that spigot, militias quickly found ways to profit from the card scheme.