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Iraq Cracks Down on Money Laundering with Tough New Regulations

The Iraqi government has recently implemented a series of tough new regulations aimed at combating money laundering and terrorist financing in the country.

The Anti-Money Laundering and Countering Terrorist Financing Law No. 39 of 2015

The main legislative framework for anti-money laundering (AML) and counter-terrorism financing (CTF) in Iraq is the Anti-Money Laundering and Countering Terrorist Financing Law No. 39 of 2015. The law establishes a comprehensive framework for preventing, detecting, and punishing money laundering and terrorist financing in Iraq.

Key Requirements

Financial institutions, non-financial businesses, professions, and designated non-financial businesses and professions (DNFBPs) are required to comply with the AML regulations. Key requirements include:

  • Customer due diligence
  • Know your customer rules
  • Suspicious transaction reporting
  • Record-keeping
  • Internal controls and policies
  • Training
  • Supervisory oversight

Customer Due Diligence

Financial institutions and DNFBPs must complete customer due diligence processes when establishing a business connection or completing a transaction that exceeds a certain level. This includes verifying clients’ identities as well as the purpose and nature of the business partnership or transaction.

Suspicious Transaction Reporting

Covered entities must notify suspicious transactions to Iraq’s financial intelligence unit (FIU) of suspicious transactions and wait for instruction before proceeding with the transaction. Suspicious transaction reports (STRs) 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.

Record-Keeping

Financial institutions and DNFBPs are also required to preserve accurate and full records of their transactions and client interactions. These documents must be preserved for at least five years.

Internal Controls and Policies

To achieve compliance with AML rules, financial institutions and DNFBPs must adopt internal controls and policies, including policies and processes for identifying, reporting, and managing money laundering and terrorism financing threats. They are also expected to conduct AML training for their personnel in order to ensure that they are aware of the dangers of money laundering and terrorism financing, as well as how to detect and report suspicious activity.

The Office of Combating Money Laundering and Terrorism Financing

The Office of Combating Money Laundering and Terrorism Financing (Money Laundering Reporting Office) was established within the Central Bank of Iraq in 2007 and was reconfigured in 2015 with complete independence following the issuance of Anti-Money Laundering and Terrorism Financing Law No. 39.

Main Requirements

The office’s main requirements include:

  • Receiving, acquiring, or investigating reports or information from reporting organizations concerning operations suspected of including original criminal proceeds, money laundering, or terrorism funding.
  • Analyzing information and communicating with relevant authorities to execute its duties.

Compliance Program

Financial institutions in Iraq, as well as certain non-financial businesses and professions, are required to have a compliance program in place. These initiatives will work together to help Iraq achieve the following goals:

  • Information exchange on money laundering and terrorism financing with appropriate authorities in government departments and the public sector
  • Participation in international organizations and conferences dealing with money laundering and terrorism funding
  • Creating a database for the AML/CFT office
  • Providing technical guidance in relation to money laundering and terrorism financing agreements and treaties

Consequences of Non-Compliance

Failure to comply with these requirements may result in hefty penalties; therefore, compliance must be taken seriously. With Sanction Scanner solutions, you can ensure that your firm is in compliance with Iraq’s anti-money laundering legislation.