Financial Crime World

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

Introduction

In an effort to combat the growing threats of 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.

Customer Due Diligence

  • Financial institutions and designated non-financial businesses and professions (DNFBPs) are required to conduct thorough customer due diligence when establishing business connections or completing transactions exceeding specific thresholds.
  • Know your customer (KYC) rules require covered entities to verify the identities of non-account holders conducting transactions worth at least 5 million Iraqi dinars ($4,250) or more.

Reporting Suspicious Transactions

  • Financial institutions and DNFBPs 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 and Internal Controls

  • Entities subject to the Anti-Money Laundering Act (AMLA) must maintain accurate records of transactions and client interactions for at least five years.
  • They are also required to establish internal controls and policies to identify, report, and manage money laundering and terrorism financing threats.

Training and Education

  • Personnel must receive training on AML/CFT risks and procedures to detect and report suspicious activity.
  • The Office of Anti-Money Laundering and Counter-Terrorism Financing (Money Laundering Reporting Office) plays a crucial role in enforcing these regulations, receiving reports, analyzing information, and communicating with reporting organizations.

Compliance Programs

  • Financial institutions and DNFBPs must 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 can result in penalties that could damage a business’s reputation and financial standing.

Sanction Scanner Solutions

  • To ensure compliance, businesses can rely on sanction scanner solutions, which can help safeguard against financial risks and reputational damage.

Conclusion

The introduction of these regulations is a significant step towards combating money laundering and terrorism financing in Iraq. It is essential for businesses to be aware of their obligations under the new law and take proactive measures to ensure compliance.