Iraq, Lebanon and Syria top the list of Middle Eastern countries that have witnessed a remarkable boom in what is described as the “frozen US dollar” in recent years. The government banks of these countries have issued successive statements warning their citizens against buying or trading this currency, or following its promoters, given that this term has turned into a trap for dozens of victims.
Frozen dollar trading
A few days ago, an official at the Central Bank of Syria told the local newspaper Al-Watan, which is close to the government, that this trade has spread widely and directly through social media, and is being handled by professional gangs that offer to sell it online, in exchange for a smaller number of regular dollar units.
The source described the trade in the so-called frozen dollar as a fraudulent operation, in which its promoters spread this concept as a regular dollar issued by the US Federal Reserve Bank with valid serial numbers, and containing all the security codes found in the official dollar, while the matter – according to the source – is a means of disbursing counterfeit money through social media and trading it, and offering it at a price lower than the real price of the valid dollar.
The Central Bank of Syria warned that buying and selling these dollars is illegal, which necessitates taking legal action against anyone who trades or promotes them.
Earlier, a statement by the General Directorate of the Lebanese Internal Security Forces also explained that the goal of promoting the frozen dollar is to facilitate the sale of counterfeit dollars by deceiving people into believing that there is a frozen dollar in order to seize their money, as the correct currency is exchanged for the counterfeit currency during the process of receiving and delivering. A number of members of these gangs have been arrested, and work is continuing to arrest everyone who participated or has any connection to them.
In Iraq, the Central Bank denied in a statement the existence of what is described as the frozen Libyan dollar, based on procedures that verify the exchange of information with the relevant authorities inside and outside Iraq, stressing the continuation of its control and auditing procedures in the trading of foreign currencies.
From frozen to forged
Pages with fake names are spreading across social media platforms, promoting what is described as the frozen dollar, and luring their victims through tempting advertisements offering to sell $1,000 at half its value, on condition that the price is paid in sound dollars.
NetworkX Search data ranked Facebook as the top platform for searches for the term “frozen dollar” with a percentage of about 40%, followed by YouTube with a percentage of about 17%, then Instagram with 11%.
One of the advertisements published on the blue platform states that the dollar offered for sale can be subjected to all known types of examination, such as needle examination, detector examination, or touch examination, with reference to the availability of shipping to all countries of the world.
Another announcement indicated that quantities were available that could be ordered from Syria, Lebanon, Iraq and other countries, and that they bore serial numbers that were prohibited from being traded within banks, but were valid for use in domestic markets or transfer through exchange offices.
The dollar dominates the global financial system and global trade, and the International Monetary Fund expects it to continue to dominate as the foreign reserve currency in countries around the world.
According to press sources, the facts indicate that the term frozen dollar began to appear after the United States took measures to stop the effectiveness of the balances that were illegally seized in both Kuwaiti banks during the Iraqi occupation, and Iraqi banks on the eve of the fall of Saddam Hussein’s regime in 2003, and the fall of Muammar Gaddafi’s regime in 2011.
The “Lira Today” website, which specializes in Syrian economic news, explained that the United States was forced, after a number of countries in the region became involved in conflicts and some banks were exposed to looting and theft, to take strict measures represented by invalidating the value of the looted balances according to the serial numbers they possess, and it was able to generalize this measure after it received the numbers of the stolen dollars either from their owners or through intelligence methods.
frozen dollar
Banking expert Moati Abu Mara believes that the frozen dollar is a dollar printed in a regular manner, but it is forbidden to deal with it. The difference between it and the counterfeit is that it can only be discovered by banks, unlike the counterfeit dollar, which can be discovered by examining it at banks or experienced money changers, according to the Syrian website “Al-Iqtisad Al-Youm.”
He explains that a certain series of US dollar numbers can be frozen in some cases if the US Federal Reserve is able to know them, as they are reported when banks are robbed. He points out that many people are trying to exploit this issue to promote counterfeit dollars as frozen, and to deceive people who fall victim to fraud and scams.
Professional cross-border networks later exploited the term and developed it into the “frozen Libyan dollar” to market counterfeit dollars, taking advantage of the executive order issued by former US President Barack Obama, which froze the assets of Gaddafi, his family and senior officials, in addition to the Libyan government, the Libyan Central Bank and sovereign wealth funds.
The former Libyan ambassador to the Iraqi capital, Baghdad, Al-Sayed Ali, denied the existence of what is called the frozen Libyan dollar. He explained in press statements dating back to August 2021 that the Central Bank of Libya has preserved the state’s cash funds in various currencies from looting, theft, or seizure since the declaration of independence until today.
The former ambassador pointed out at the time that what is being said and rumored about the existence of a frozen Libyan dollar are lies fabricated outside Libya by transnational crime organizations and groups, and their goal is to lure the simple, naive and ignorant to steal their money in a form of fraud and deception.
Victims of frozen and counterfeit dollars
Ahmed (a pseudonym), who lives in the city of Aleppo, north of the capital Damascus, and is one of the victims of the frozen dollar, says that he was subjected to a scam after he contacted someone who runs a page on social media offering to sell frozen dollars for regular dollars at double the difference.
According to the claim that Ahmed filed with the Criminal Security Branch – according to the Syrian Ministry of Interior website – he handed over a clean sum of 7.5 US dollars belonging to one of his relatives to a person sent by the owner of the aforementioned page, but he was surprised after handing over the sum and receiving the envelope that the sum sent to him was white paper.
One of the groups arrested by the Syrian Interior Ministry admitted to creating fake Facebook pages to sell frozen US dollars at a low value, while the victims received nothing more than local currency.
Frozen or counterfeit dollars are spreading in various Syrian cities, especially in the areas of northern Syria controlled by the opposition military factions and the Syrian Democratic Forces.
Local reports have expressed residents’ fears that exchange companies owned by leaders of some of these factions are delivering foreign remittances in counterfeit dollars and seizing the real dollars.
In Lebanon, since 2019, it has been facing a severe economic crisis that has led to the collapse of the local currency and a severe shortage of cash. In the spring of 2022, the Lebanese security forces arrested three groups accused of promoting frozen dollars after they had claimed more than 60 victims. The most prominent areas considered a stage for the activity of the promoters are Beirut, Choueifat, Nabatieh, Batroun, Tripoli, and the Bekaa.
Meanwhile, the number of security operations carried out by the Internal Security Forces during the years 2022 and 2023, according to its website, amounted to about 23 operations, and from January to May of last year, more than 8 operations led to the arrest of several networks promoting counterfeit dollars.
In Iraq, press information indicates that networks promoting frozen dollars are spreading in the capital, Baghdad, and in the city of Erbil, the capital of the Kurdistan Region, and they operate in complete secrecy for fear of being pursued, and they continue their trade through the Facebook platform, which is more widely used than other platforms.
Reasons for the spread of this trade
Syrian academic Imad al-Din al-Musbah, who resides in Riyadh, believes that the spread of this phenomenon in Syria, Lebanon and Iraq is a cause for concern, because it is a direct result of the difficult economic, security and international conditions that these countries are experiencing.
Speaking to Al Jazeera Net, he explained that the regime’s war against the Syrian people, which has been ongoing since 2011, has led to a near-total collapse of the economy, causing poverty and unemployment rates to rise to unprecedented levels.
For her part, banking expert Salam Smeisim attributed the growth of the phenomenon of ““frozen Libyan dollar” In Iraq, there is weak control over banking, noting that “buying and selling frozen dollars from abroad to Iraq is classified as money laundering.”
Smeisim added that the dollars being sold are not counterfeit, but rather government entitlements and individual rights of workers in Libya that were smuggled abroad by armed factions. Due to the lack of a strong government in Libya that monitors and holds accountable those who trade in foreign currency, this trade has grown.
Analysts also believe that there are four common sources of frozen or counterfeit dollars in Syria, Lebanon and Iraq, namely:
- Some militias fighting in northeastern Syria alongside Assad’s forces possess large quantities of it and spend it as the price of commercial goods they buy from the areas they control in the country, according to a reporter for the Ain al-Furat news website from the city of Deir ez-Zor.
- Syrian military factions that fought alongside Russian forces in Libya.
- Drug trafficking is widespread in most Syrian cities and towns.
- Counterfeit dollar printing networks in Türkiye that communicate through intermediaries with the internal market in Syria, Iraq and Lebanon.
Effects of the spread of this trade
The Syrian academic, Al-Musbah, links the continued growth of the phenomenon, despite the strict government security measures, to the lack of trust in the financial and banking system in the three countries, which prompts citizens to search for alternative means. In addition, the weakness of the regulatory bodies in these countries has facilitated the circulation of illicit funds and fraudulent activities.
And the lamp was determined For Al Jazeera Net The economic repercussions of this phenomenon are as follows:
- Negative impact on the macroeconomy.
- Loss of personal savings.
- Promote illegal activities such as money laundering, fraud and complicate economic conditions.
- The continued existence of this phenomenon leads to the erosion of confidence in the local currency, which exacerbates inflation and deepens the living crisis.
- It leads to financial instability and uncertainty for foreign and local investors wishing to invest in these countries, which hinders growth in them.
- Future risks of the phenomenon include increased poverty and unemployment rates and worsening security conditions as a result of illegal activities.
- These countries may face increasing economic isolation from the international community, making it difficult for them to obtain economic aid and international loans.
The security authorities in the three Arab countries are trying to close this file, but to no avail. The cross-border networks continue their promotional campaigns for the frozen dollar, exploiting the widespread chaos, low supply, and decline in its official exchange rate, in addition to the stagnation of trade, the linkage of prices to the dollar, and the decline in foreign remittances.
The emergence of a black (parallel) market for foreign currencies also attracts those seeking dollars outside official channels, in light of the very complex procedures in this regard.
