Financial Crime World

Iraq Tightens the Screws on Money Laundering and Terrorism Financing: AML/CFT Regulations Explained

In a bid to combat money laundering and terrorism financing, Iraq has introduced a comprehensive set of regulations aimed at deterring, identifying, and punishing such illegal activities. The country’s Anti-Money Laundering and Countering Terrorist Financing Law No. 39 of 2015 serves as the foundation for these efforts.

Key Requirements of Iraq’s AML/CFT Regulations

  • Customer Due Diligence: Financial institutions and designated non-financial businesses and professions (DNFBPs) must conduct thorough customer due diligence when establishing business connections or completing transactions exceeding specific thresholds.
  • Know Your Customer (KYC) Rules: Covered entities are required to verify the identities of non-account holders conducting transactions worth at least 5 million Iraqi dinars ($4,250) or more. Beneficial owners must also be identified for accounts and transactions above 10 million Iraqi dinars ($8,500).
  • Suspicious Transaction Reporting: Entities subject to the AMLA are mandated to report suspicious transactions to Iraq’s financial intelligence unit (FIU), which will then provide guidance on whether to proceed with the transaction. Funds are frozen until instruction is received.
  • Record-Keeping: Financial institutions and DNFBPs must maintain accurate records of transactions and client interactions for at least five years.
  • Internal Controls and Policies: Entities must establish internal controls and policies to identify, report, and manage money laundering and terrorism financing threats.
  • Training: Personnel must receive training on AML/CFT risks and procedures to detect and report suspicious activity.

Enforcement and Compliance

The Office of Anti-Money Laundering and Counter-Terrorism Financing (Money Laundering Reporting Office) plays a crucial role in enforcing these regulations. The office receives reports, analyzes information, and communicates with reporting organizations to facilitate its duties.

Financial institutions and DNFBPs must also establish compliance programs to ensure adherence to AML/CFT requirements. These initiatives include:

  • Information exchange with government authorities
  • Participation in international conferences
  • Database creation
  • Training sessions for personnel

Consequences of Non-Compliance

Failure to comply with Iraq’s AML/CFT regulations can result in severe penalties, emphasizing the importance of strict adherence to these measures.

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