Iraq’s Financial Institutions Face Scrutiny Over Compliance with Anti-Money Laundering and Counter-Terrorism Financing Laws
The Iraqi government has stepped up efforts to combat money laundering and terrorist financing, with financial institutions and non-financial businesses facing increased scrutiny over their compliance with anti-money laundering (AML) and counter-terrorism financing (CTF) regulations.
Compliance Requirements
Under the Anti-Money Laundering and Countering Terrorist Financing Law No. 39 of 2015, financial institutions, including banks and other financial entities, are required to implement strict measures to prevent, detect, and report suspicious transactions. Key requirements include:
- Conducting customer due diligence
- Verifying client identities
- Reporting suspicious transactions to Iraq’s Financial Intelligence Unit (FIU)
- Maintaining accurate records of transactions and client interactions for at least five years
Oversight and Enforcement
The Office of Combating Money Laundering and Terrorism Financing, established within the Central Bank of Iraq in 2007, is responsible for overseeing compliance with AML/CTF regulations. The office receives reports from financial institutions and investigates suspected money laundering and terrorist financing activities.
Financial institutions that fail to comply with AML/CTF regulations face severe penalties, including fines and even suspension or revocation of their licenses.
Consequences of Non-Compliance
Experts warn that non-compliance can have serious consequences for both the institution and its clients. “Failure to comply with AML/CTF regulations can lead to reputational damage, financial losses, and even criminal prosecution,” said a senior banking official.
Training and Education
In response to these risks, many financial institutions are investing in training programs for their staff to ensure they understand the importance of AML/CTF compliance. “Compliance is not just a regulatory requirement, it’s a business imperative,” said a compliance officer at a major bank. “We need to ensure that our staff have the knowledge and skills to identify and report suspicious transactions.”
International Cooperation
Iraqi authorities are also working to enhance international cooperation on AML/CTF issues, with plans underway to participate in regional and global initiatives aimed at combating money laundering and terrorist financing.
Predicted Increase in Enforcement Actions
As the government continues to crack down on financial institutions that fail to comply with AML/CTF regulations, experts predict a significant increase in enforcement actions against non-compliant institutions. “The message is clear: compliance is not optional,” said an industry expert. “Financial institutions must take AML/CTF seriously and invest in the necessary systems and processes to ensure they are compliant.”