Financial Crime World

Central Bank of Iraq Granted Broad Powers Under New Law

The Central Bank of Iraq (CBI) has been granted significant powers under a new law aimed at strengthening its role in regulating the country’s financial system.

Key Provisions of the Law

  • The CBI will have the authority to issue legally binding orders to individuals and entities, directing them to take specific actions that comply with the law.
  • The bank will also be able to issue internal rules and guidelines governing its organization and administration.
  • The capital structure of the CBI is outlined in the law, with an authorized capital of 100 billion dinars fully paid up by the state in exchange for one hundred percent of the bank’s capital stock.

Capital Structure

  • The state will hold sole ownership of the bank’s shares and will not pay dividends or allow them to be transferred or encumbered.
  • The law outlines the treatment of unrealized gains, with any such gains included in the bank’s net income to be deducted from the net income and allocated to an unrealized profits reserve account.

Profit Distribution

  • The law sets out rules for the distribution of net profits, with 80 percent of any net profits available for distribution to be transferred to the general reserve account until the reserve account reaches a sum equal to 10 percent of the bank’s total assets.
  • Any remaining net profits will be transferred to other reserve accounts established by the bank.

Shortfalls in Capital

  • The law provides for the coverage of shortfalls in capital, with the Board responsible for assessing any shortfall and preparing a report on its causes and extent.
  • If a capital contribution is required, the Board will consult with the Minister of Finance and request a contribution from the state.

Composition and Responsibilities of the CBI’s Board of Directors

  • The Board of Directors will consist of nine members including the Governor, Deputy Governors, Senior Managers, and experts in monetary, banking, or legal fields.
  • The law outlines the responsibilities of the Board, which include assessing any shortfall in capital and preparing a report on its causes and extent.

Overall, this new law aims to strengthen the CBI’s role in regulating the country’s financial system and ensure the bank’s stability and soundness.