Protect Your Investment: Iraqi Dinar Scams Explained

The Iraqi dinar is the official currency in Iraq, a country with a turbulent history. That turbulence is reflected in the Iraqi economy, which is dependent on the political climate and oil prices. These circumstances create an unstable climate, and currencies tend to weaken in those conditions.

The Iraqi dinar is one of the weakest currencies in the world. You can get around 1450 Iraqi dinars for one American dollar depending on the exchange rate.

And the rate is precisely why we are all here – to learn about the scams revolving around the revaluation of the Iraqi dinar, as well as the protection against counterfeit.

General Facts about the Iraqi Dinar

Dinar is the name of many official currencies, as it stems from the Latin word for a silver coin – denarius. This is the currency title used in eight countries that were occupied by the Ottoman Empire. Each dinar has its own worth, symbol, and denomination.

The Iraqi dinar’s symbol is ع.د. and its ISO code is IQD. There are six denominations, and all are banknotes. Unfortunately, inflation is so high that coins became obsolete.

Even a 50-dinar note became unusable, so there are only 250, 1000, 5000, 10000, and 50000 IRQ bills. People are often afraid to use the “big bills”, so they conduct business with stacks of 250 or 1000 Iraqi dinars.

Alike many other currencies, Iraqi dinar is pegged to the US dollar. However, until 2021 it was set by the Iraqi government. There are many more interesting facts, especially when it comes to the history of this currency, so keep reading to learn everything about Iraqi Dinar.

History of the Iraqi Dinar

Dinar was first issued in 1932 after it had replaced the Indian rupee when Iraq gained independence from the UK. The next twenty years marked a period of development for Iraq. The dinar was pegged to the British pound and later the United States dollar, and there was a lot of international interest in Iraq’s oil reserves.

By the end of the 1950s, the monarchy was overthrown, and soon enough, the Baathist gained power. Their candidate Saddam Hussein won the election in 1979, after which began the era of conflict for Iraq.

Iraqi dinar started with small denominations, such as ¼, ½, 1, 5, and 10. However, with inflation and wars, the value of these banknotes became so minor that they weren’t necessary. After the Gulf war, the 5,000 and 10,000 banknotes appeared as the Iraqi dinar devalued.

Swiss and Saddam Dinar

Today’s scamming wouldn’t be possible had it not been for complications with the Iraqi dinar printing in the 90s and early 2000s. During the sanctions caused by the Gulf war, it wasn’t possible to print the dinars using the Swiss method. Saddam Hussein and his government print the money locally and in China, but very poorly.

The counterfeit industry was booming. Some fake money was made with more quality than the real one, which was often irregularly cut, so not all notes looked identical. The money printed before the war was called Swiss dinar, and the one printed between 1991 and 2003 was Saddam dinar.

Regions of Iraq with more autonomy avoided using Saddam Dinar and protected those regions from the 2003 crash. After the war ended, Iraq issued new notes with much better quality, with an idea to unify the country. Each area could use one type of money, and Swiss and Saddam dinars were becoming obsolete.

However, because of the much better quality and the rare fact, they exchanged Swiss Dinar at a rate of 1 Swiss dinar for 150 new notes. Meanwhile, the Saddam dinar went on a one-to-one rate.

The Scam Rate in the US Increased in 2011

Ever since the 2003 crash of the Iraqi dinar happened, many forex investors have been speculating about its revaluation. Some speculate out of curiosity, and those looking to make a quick buck out of it.

In 2011 the Washington State Department of Financial Institutions issued an alert for consumers due to a high rate of Iraqi dinar scammers. Many people invested money in practically worthless currency because someone promised a high return.

It seems like it was around 2010 that many sketchy people decided to become forex brokers and traders to manipulate others into buying thousands and thousands of dollars worth of Iraqi dinar.

How Are Scammers Operating?

In 2011 when this scam gained popularity, 1 USD was worth around 1100 IQD. Today the Dinar is worth less. However, these scammers are persuading their clients that the value is about to go up any day, just like it happened to the Kuwaiti dinar after the war.

Fraudsters usually operate under the Money Service Business “badge” as dinar dealers or as sellers of collector items. These are the ways that these people conduct their business, as it is illegal in the US to market investment without regulations.

They are marketing this investment using countries like Kuwait and Germany as an example, which revalued their currency quickly after the devastating wars. However, the main difference is that these currencies were pegged to another stable currency, while the Iraqi government set the Iraqi dinar for almost 40 years.

Years that followed the end of the Gulf war marked a time when one US dollar could buy you around 3000 Iraqi dinars. The situation improved, but the pandemic brought another crisis to this country’s economy, and the government had to devalue the currency again. People who invested prior to 2020 and waited for a revaluation lost a lot of money.

How to Protect Yourself from Iraqi Dinar Scams

It is safe to say that the Iraqi dinar is a risky investment and that its worth makes sense only inside the borders of Iraq. However, the scams don’t stop even then. There is a chance of receiving a counterfeit note, especially if you get the big ones.

Knowing a few tricks might help you get into an uncomfortable situation. When you get a bill and you feel suspicious, check the security thread, find raised letters and watermarks, and try to figure out if the metallic Inks are used.

If all of that checks out, see if it glows under ultraviolet light. There are holograms embedded to differentiate them from fakes.