Financial Crime World

Iraq’s New Anti-Money Laundering Law Seeks to Combat Terrorist Financing and Money Laundering

The Iraqi government has introduced a new anti-money laundering law aimed at combating terrorist financing and money laundering, in an effort to comply with international standards and avoid being added to the Financial Action Task Force (FATF) blacklist.

Overview of the New Law

The new Combating Money Laundering and Terrorist Financing Office will have a wide- ranging supervisory and regulatory role to minimize the threat of money laundering and related crimes. The office will receive and deal with suspicious transaction reports from financial institutions and other non-financial professions, including commercial and economic establishments.

Key Provisions

  • Establishes a Committee for Freezing Terrorist Funds within the Central Bank of Iraq (CBI) to deal with the freezing of funds belonging to terrorists or individuals specified by the United Nations Security Council’s Counter Terrorism Committee.
  • Includes provisions for international cooperation and extradition, aimed at addressing concerns raised in a 2012 report.
  • Requires that money laundering and terrorist financing offenses be considered crimes for which Iraq will offer international cooperation on the basis of treaties or reciprocity.
  • Allows for exchange of information with foreign entities to combat money laundering or its predicate offenses.

Penalties

The draft law outlines harsher penalties than those in the current law for individuals, legal persons, and financial institutions convicted of money laundering or terrorist financing. The maximum penalty for money laundering offense under the draft law is 15 years, while the current law imposes a maximum sentence of four years.

Procedural Actions

The law also includes procedural actions to be taken against financial and non-financial professionals who violate its provisions, including:

  • Withdrawal of licenses
  • Restricting the power of managers
  • Preventing violators from practicing in the same field for a certain period

Concerns

However, the draft law does not address whistle-blowing, which is a major concern as it creates a disincentive for employees to report suspicious transactions.

Implementation and Monitoring

The Iraqi government is under pressure to ratify the new anti-money laundering law to avoid being added to the FATF blacklist. The implementation of this law will be closely monitored by the financial community in the Middle East.

Contact Information

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