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CBI Tightens Grip on Cash Transfer Mechanisms in Iraq
The Central Bank of Iraq (CBI) has announced a new set of regulations governing cash transfer modalities in the country, effective immediately. According to sources within the banking sector, the CBI will now have overall responsibility for approving payment transactions and setting withdrawal limits.
Cash Transfer Process
Local financial service providers (FSPs) report that locally initiated transactions typically take no more than three days to process, while international transfers may take up to three business days via intermediary banks. However, disruptions in the transfer chain can cause delays or failures.
The cash distribution process varies depending on the type of delivery mechanism used. For mobile money transfers, beneficiaries must first set up a mobile wallet and receive a temporary pin code. Once validated, they can collect their cash from designated points of sale. Hawala agents, on the other hand, withdraw cash from their accounts and distribute it to beneficiaries according to a list provided by implementing agencies.
Fees and Costs
- Banks: 0.7 percent transfer fee rate
- Hawala Dealers: $2-4 per transaction within Iraq
- Mobile Money Services: 1.5 to 2 percent fees, depending on location
In addition to these fees, there may be other costs associated with delivery mechanisms, including maintenance costs. However, these figures were not disclosed due to competition concerns.
Transaction Limits and Documentation
The CBI has outlined the different documentation required for each cash transfer modality in Table 2 below:
| Transfer Modality | Documentation Required |
|---|---|
| Mobile Money Transfer | Beneficiary registration, training, cash-out report, online portal report |
| Hawala Transfer | List of beneficiaries, payment request |
Regulations Aim to Improve Efficiency and Transparency
The new regulations aim to improve the efficiency and transparency of cash transfer mechanisms in Iraq. The CBI’s directive limiting international transactions to 75 percent in USD and 25 percent in IQD is a response to the COVID-19 pandemic. FSPs report that there are no limits on cash withdrawal per day for individuals or corporate clients.
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