Iraq Makes Progress in Combating Money Laundering, Financial Watchdogs Note
A Significant Improvement Since 2015
Seven years ago, Iraq’s financial system was plagued by problems, with an estimated $800 million in US currency illegally flowing out of the country every week. However, since then, efforts to combat illicit finance have improved significantly, according to international watchdogs.
Progress in Combating Money Laundering
Iraq landed on watchlists for money laundering failures, but has since made significant progress in cleaning up corruption and implementing anti-money laundering measures. The country passed a law in 2015 that criminalized money laundering and terrorism financing, and created an anti-money laundering council within the central bank.
Key Initiatives
- The council became the authority for supervision of compliance.
- An office was tasked with handling suspicious activity reports.
- The effort established the infrastructure needed to support the country’s anti-money laundering and counter-terrorism financing efforts.
Progress Acknowledged by International Experts
“The government did a good job in getting people to focus on what they needed to do under the FATF plan,” said John Sullivan, a former US Treasury Department attaché to Iraq who now is a director with consultancy Financial Integrity Network. “They really have made progress against money laundering.”
Challenges Remain
Iraq was taken off the list of countries failing to tackle money laundering by the Financial Action Task Force (FATF) in June. However, the country still has work to do, as does its leadership, with corruption remaining a major issue.
Priorities for Improvement
- Strengthening the country’s defenses against corruption is crucial for developing correspondent banking relationships across the globe.
- Iraq needs more human development in the anti-money laundering area.
Central Bank’s Role
The central bank governor, Ali Mohsen Ismail Al-Alaq, said cleaning up corruption is a priority. The central bank has also withdrawn licenses from exchange houses caught moving money illicitly.
Future Evaluations
The next round of evaluations from the FATF will focus on Iraq’s anti-money laundering effectiveness rather than just passing laws and establishing controls.
Conclusion
Despite progress, Iraq still ranks 168th out of 180 countries on the Corruption Perceptions Index produced by Transparency International, tied with Venezuela. Improvement against corruption could also bring renewed foreign investor interest. The fight against money laundering is crucial for the country’s development, and Iraq must continue to work towards strengthening its defenses against corruption.