Financial Crime World

Iraq Takes Steps to Prevent Financial Crime through Anti-Money Laundering and Counter-Terrorism Financing Initiatives

Strengthening Financial Integrity

In a bid to curb the menace of financial crime, including money laundering and terrorist financing, Iraq has put in place a robust legislative framework aimed at deterring, identifying, and punishing such illegal activities.

Anti-Money Laundering (AML) and Counter-Terrorism Financing (CTF) Law

The country’s AML/CTF law, enacted in 2015, serves as the cornerstone of these efforts. The law requires financial institutions, non-financial businesses, professions, and designated non-financial businesses and professions (DNFBPs) to adhere to a set of key requirements.

Key Requirements

Customer Due Diligence (CDD)

  • Conduct CDD processes when establishing business connections or completing transactions exceeding specific levels.
  • Verify clients’ identities, as well as the purpose and nature of the business partnership or transaction.

Know Your Customer (KYC) Rules

  • Verify the identification of non-account holders conducting transactions worth at least five million Iraqi dinars (approximately $4,250) or more.
  • Identify beneficial owners when creating an account and transacting more than 10 million Iraqi dinars (roughly $8,500).

Reporting Suspicious Transactions

Entities subject to the AMLA are required to report suspicious transactions to Iraq’s financial intelligence unit (FIU), which may freeze funds pending further instruction.

Compliance Program

To achieve compliance with AML rules, financial institutions and DNFBPs must:

  • Adopt internal controls and policies, including processes for identifying, reporting, and managing money laundering and terrorism financing threats.
  • Conduct regular training sessions to ensure personnel are aware of the dangers of money laundering and terrorism financing, as well as how to detect and report suspicious activity.

Office of Combating Money Laundering and Terrorist Financing

The Office of Combating Money Laundering and Terrorist Financing (Money Laundering Reporting Office) was established within the Central Bank of Iraq in 2007 and reconfigured in 2015 with complete independence. The office’s primary responsibilities include:

  • Receiving and investigating reports of suspected money laundering or terrorist financing
  • Analyzing information
  • Suspending financial transactions if necessary

Consequences of Non-Compliance

Failure to comply with these requirements can result in severe penalties. Therefore, it is essential for financial institutions and enterprises to take proactive measures to ensure compliance with Iraq’s anti-money laundering legislation.

Staying Ahead of the Curve

Sanction Scanner solutions offer a range of tools to help businesses ensure compliance with AML regulations and stay ahead of the curve in preventing financial crime.