The 24-year-old woman, Duaa Amid Ibrahim, is the sister of one of Baghdadi's three wives, and has been held by Kurdistan Regional Government (KRG) security forces since she was caught entering Erbil with a suicide vest beneath her burqa, the Fox News reported.
Kurdish authorities say she was sent by al-Qaeda on a mission that long predated her brother-in-law's rise to power. With Baghdadi now becoming arguably the most dangerous terrorist in the world, Ibrahim appears to have major clout behind bars, the report said.
Years behind bars has done nothing to soften her radical beliefs, the official said.
Ibrahim was a teenage widow of an al-Qaeda fighter when she was arrested.
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A high-ranking intelligence and security official from Erbil's security agency Asayish was quoted as saying that Ibrahim's case is still proceeding through the legal system, although it is likely she will receive a life sentence.
Ibrahim is regularly monitored by the international Red Cross along with dozens of other jailed female jihadists in compliance with international laws.
ISIS' Iraqi stronghold in Mosul lies just about 90 km west of Erbil, and the Kurdish Peshmerga forces clash almost daily with ISIS along the frontlines.
Ibrahim's brother-in-law rose through the ranks of al-Qaeda's Iraqi arm following his release from the US-run Camp Bucca detention center in southern Iraq in 2004. Baghdadi announced his split from al-Qaeda and the formation of ISIS in August, 2013.
Despite periodic rumours of his death, Kurdish officials believe Baghdadi is alive and shuttling between the Iraqi cities of Mosul and Ramadi.