Financial Crime World

IRAQ TIGHTENS NOOSE ON MONEY LAUNDERING WITH STRINGENT REGULATIONS

In a bid to combat money laundering and terrorist financing, the Iraqi government has enacted stringent regulations aimed at detecting and preventing such illicit activities. The Anti-Money Laundering and Countering Terrorist Financing Law No. 39 of 2015 serves as the cornerstone of these efforts.

Key Requirements

Customer Due Diligence

  • Financial institutions and designated non-financial businesses and professions are expected to conduct thorough customer due diligence when establishing business connections or completing transactions exceeding specific levels.
  • This involves verifying clients’ identities and the purpose and nature of the business partnership or transaction.

Know Your Customer (KYC) Rules

  • Verification of identification for non-account holders conducting transactions worth at least five million Iraqi dinars, approximately $4,250.
  • Beneficial owners must also be recognized when creating an account and transacting more than 10 million Iraqi dinars, roughly $8,500.

Suspicious Transaction Reporting (STRs)

  • Reports must be completed for any transactions involving funds derived from illegal activities or money laundering, intended for the financing of crime, including terrorism, or over which a criminal organization has disposal power.
  • The financial intelligence unit (FIU) is responsible for receiving and investigating such reports.

Record-Keeping

  • Financial institutions and DNFBPs are required to maintain accurate and full records of their transactions and client interactions, preserving them for at least five years.

Internal Controls and Policies

  • Financial institutions and DNFBPs must adopt internal controls and policies, including processes for identifying, reporting, and managing money laundering and terrorism financing threats.
  • Training is also mandatory to ensure that personnel are aware of the dangers of money laundering and terrorism financing, as well as how to detect and report suspicious activity.

Supervision

  • The Office of Combating Money Laundering and Terrorism Financing (Money Laundering Reporting Office), established within the Central Bank of Iraq, plays a crucial role in supervising AML/CFT efforts.
  • The office receives reports, analyzes information, suspends financial transactions if necessary, and transmits communications to initiate legal action.

Compliance Programs

  • Financial institutions must establish compliance programs that facilitate information exchange with government authorities, participate in international organizations, create databases for analysis and sharing of information, provide statistics on AML/CFT activities, organize training sessions, and notify regulatory authorities of non-compliance.

Consequences of Non-Compliance

  • Failure to comply with these requirements may result in severe penalties, emphasizing the importance of implementing effective anti-money laundering measures.

Staying Ahead of Illicit Activities

With Sanction Scanner solutions, financial institutions can ensure compliance with Iraq’s anti-money laundering legislation and stay ahead of illicit activities.