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SUSPICION OF MONEY LAUNDERING OR TERRORISM FINANCING: NEW REGULATIONS INTRODUCED IN IRAQ
The Central Bank of Iraq has introduced new regulations aimed at combating money laundering and terrorism financing in the country. The new rules, outlined in Articles 11-15 of the law, require financial institutions and designated non-financial businesses and professions (DNFBPs) to implement robust anti-money laundering and countering the financing of terrorism (AML/CFT) programs.
Verification of Customer Identity
Financial institutions and DNFBPs must verify the identity of customers and beneficial owners whenever doubts arise about the veracity or adequacy of previously obtained identification data. This includes delaying verification until after the establishment of a business relationship, as permitted by regulatory authorities.
CDD Obligations
Financial institutions and DNFBPs are required to apply customer due diligence (CDD) measures to their existing customers based on materiality and risks at appropriate times, taking into account the validity and adequacy of information obtained in the past. If unable to comply with CDD obligations, they must refrain from opening accounts or commencing business relationships.
Records Maintenance
Financial institutions and DNFBPs are required to maintain records of customer identification data, transactions, and suspicious transaction reports for at least five years after the end of a business relationship. These records must be available to competent authorities in a timely manner.
AML/CFT Programs
Financial institutions and DNFBPs must establish and implement AML/CFT programs, including:
- Risk assessments
- Policies
- Procedures
- Internal controls
They must also refrain from opening or maintaining anonymous accounts, abide by names of barred persons, and report suspicious transactions to the authorities.
Independent Audit Function
Financial institutions and DNFBPs are required to establish an independent audit function to assess the effectiveness of their AML/CFT programs and procedures.
Terrorist Funds Freezing Committee
A Terrorist Funds Freezing Committee has been established at the Secretariat of the Bank to be responsible for freezing funds of terrorists or other assets of persons designated by the UN Sanctions Committee. The committee will consist of representatives from various government ministries and agencies.
The new regulations aim to strengthen Iraq’s efforts to combat money laundering and terrorism financing, and ensure that financial institutions and DNFBPs are equipped with the necessary tools to prevent such activities.