Financial Crime World

Baghdad: Iraq’s Banking Sector Takes Steps to Prevent Financial Crime

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

Iraq has taken significant steps to combat financial crime by implementing a range of AML and CTF regulations. The foundation for these efforts is the Anti-Money Laundering and Countering Terrorist Financing Law No. 39 of 2015, which establishes a comprehensive framework to prevent, detect, and punish money laundering and terrorist financing.

Key Requirements for Financial Institutions and DNFBPs

Under Iraq’s AML regulations, financial institutions and non-financial businesses and professions (DNFBPs) must adhere to certain key requirements, including:

  • Customer due diligence
  • Know your customer rules
  • Suspicious transaction reporting
  • Record-keeping
  • Internal controls and policies
  • Training for personnel

Customer Due Diligence and Verification

Financial institutions are required to complete customer due diligence when establishing a business connection or completing a transaction worth more than five million Iraqi dinars (approximately $4,250). DNFBPs must also verify the identification of non-account holders who conduct transactions worth at least 10 million Iraqi dinars (roughly $8,500).

Reporting Suspicious Transactions

Financial institutions and DNFBPs are required to report suspicious transactions to Iraq’s financial intelligence unit (FIU) and wait for instruction before proceeding with the transaction. The FIU must then analyze the transaction and provide guidance on whether it is legitimate or not.

Record-Keeping Requirements

Iraq’s banking sector is also subject to strict record-keeping requirements, with financial institutions and DNFBPs required to preserve accurate and full records of their transactions and client interactions for at least five years.

Internal Controls and Policies

To ensure compliance with AML rules, financial institutions and DNFBPs must adopt internal controls and policies, including procedures for identifying, reporting, and managing money laundering and terrorism financing threats. Personnel must also undergo regular training to stay up-to-date on the latest developments in the field of AML/CTF.

The Office of Anti-Money Laundering and Countering Financing of Terrorism (AML/CFT)

The AML/CFT office plays a crucial role in enforcing Iraq’s AML regulations. The office is responsible for:

  • Receiving, analyzing, and investigating reports of suspicious transactions
  • Providing guidance to financial institutions and DNFBPs on how to comply with the law
  • Suspending financial transactions or operations for up to seven working days if there is a concern about money laundering or terrorism financing

Compliance Program

Iraq’s banking sector must also have a compliance program in place, which includes information exchange with government departments and international organizations, as well as participation in conferences and training sessions. Failure to comply with AML regulations can result in severe penalties, making it essential for financial institutions and DNFBPs to take these requirements seriously.

Sanction Scanner Solutions

Sanction Scanner solutions can help ensure that your firm is compliant with Iraq’s anti-money laundering legislation, providing a comprehensive range of tools and services to help you navigate the complex regulatory environment.