Financial Crime World

IRAQ TOUGHENS STANCE ON MONEY LAUNDERING AND TERRORISM FINANCING

A Comprehensive Framework to Combat Illicit Financial Activities

In a bid to combat illicit financial activities, Iraq has put in place a comprehensive framework of anti-money laundering (AML) and counter-terrorism financing (CTF) regulations. The country’s Anti-Money Laundering and Countering Terrorist Financing Law No. 39 of 2015 serves as the backbone for these efforts, aiming to prevent, detect, and punish money laundering and terrorist financing.

Key Regulations for Financial Institutions and Businesses

Financial institutions, non-financial businesses, professions, and designated non-financial businesses and professions (DNFBPs) are required to adhere to a set of key regulations. These include:

Customer Due Diligence

  • Verify the identity of clients
  • Conduct thorough background checks on them before establishing business relationships or completing transactions

Know Your Customer (KYC) Rules

  • Identify beneficial owners when creating an account or transacting more than 10 million Iraqi dinars
  • Prevent illicit financial activities

Suspicious Transaction Reporting

  • Notify the financial intelligence unit (FIU) of suspicious transactions
  • Freeze relevant funds until further guidance is obtained

Record-Keeping

  • Maintain accurate and comprehensive records of their transactions and client interactions for at least five years

Internal Controls and Policies

  • Adopt internal controls and policies to ensure compliance with AML rules
  • Processes for identifying, reporting, and managing money laundering and terrorism financing threats

Training and Enforcement

Financial institutions and DNFBPs are required to conduct regular training sessions for their personnel on the dangers of money laundering and terrorism financing. The Office of Combating Money Laundering and Terrorism Financing (Money Laundering Reporting Office) plays a crucial role in enforcing these regulations.

Compliance Program Requirements

Financial institutions and certain non-financial businesses and professions are required to have a compliance program in place, which aims to achieve the following goals:

  • Information Exchange: Collaboration with government departments and public sector authorities on money laundering and terrorism financing matters
  • Participation in International Organizations: Iraq’s participation in international organizations and conferences dealing with money laundering and terrorism funding
  • Database Creation: Establishing a national center for analyzing and sharing information regarding suspected money laundering or terrorist financing, as well as supporting judicial authorities in implementing the law’s requirements
  • Statistics Analysis: Creating and analyzing precise statistics on matters pertaining to the AML/CFT Office’s functions
  • Training Sessions: Organizing training sessions for concerned staff to keep them up-to-date on new developments in the field of money laundering and terrorism financing
  • Notifications to Regulatory Authorities: Providing notifications to regulatory authorities or other competent authorities of any financial institution or non-financial organization that breaches the provisions of the AML/CFT statute

Conclusion

Iraq’s tough stance on money laundering and terrorism financing is a step towards ensuring the country’s economic stability and security. Financial institutions and businesses must take compliance seriously, as failure to do so may result in hefty penalties.