Financial Crime World

Iraq Introduces Revised Custodian Licensing Framework to Boost Foreign Investment

Iraq has taken a significant step towards strengthening its financial sector by introducing a revised custodian licensing framework, the Custodian Instructions No. (17) of 2012 (as amended in 2021). This move aims to increase foreign investment and enhance the local financial sector’s competitiveness.

Key Changes and Benefits

  • Broadened scope for financial institutions to be licensed as custodians, aligning with international practices and data protection laws
  • Greater transparency and accountability required from custodians, including:
    • Informing clients of every decision, procedure, transfer or transaction taken in relation to their assets
    • Opening individual accounts for each client
    • Providing monthly audited reports
    • Ensuring confidentiality of client data

Licensing Requirements

To be licensed as a custodian, financial institutions must meet specific requirements, including:

  • Submitting an application with detailed information about the institution’s structure, share capital, and management
  • Simplified licensing process compared to previous regulations, which required providing sureties and guarantees to the market

New Obligations for Licensed Custodians

Licensed custodians are now subject to new obligations, including:

  • Contracting with investors
  • Safekeeping assets
  • Exercising discretion to ensure higher returns for clients
  • Using latest technology in accordance with accounting standards
  • Keeping copies of all records

Central Bank Approval and Impact

The revised framework has been approved by the Central Bank of Iraq. The new regulations aim to:

  • Strengthen current Iraqi financial institutions
  • Encourage international investment in the Iraq Stock Exchange (ISX)
  • Provide greater accessibility to finance for companies already listed on the ISX

Conclusion and Next Steps

The revised custodian licensing framework is expected to boost foreign investment and strengthen the local financial sector, making it an attractive destination for international investors. For further information or advice on financial agreements and transactions, please contact: