Financial Crime World

IRAQ Faces High Risk of Money Laundering, Assessment Reveals

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IRAQ’s financial system has been found to be vulnerable to money laundering, with many areas falling short of international standards. A recent assessment by the Financial Action Task Force (FATF) revealed that IRAQ is largely non-compliant in several key areas.

Key Areas of Concern

  • National cooperation and coordination
  • Confiscation and provisional measures
  • Regulation and supervision of financial institutions
  • Terrorist financing and proliferation

FATF Report Highlights

  • IRAQ scored poorly on several fronts, including:
    • Partial compliance with customer due diligence and record keeping practices
    • Non-compliance with international standards regarding terrorist financing and proliferation
  • Significant gaps remain in implementing anti-money laundering (AML) regulations
  • Financial institution secrecy laws were deemed compliant
  • Correspondent banking sector is at risk due to inadequate AML controls
  • Use of new technologies, such as digital payment systems, is a high-risk area for money laundering

Areas for Improvement

  • Regulation and supervision of designated non-financial businesses and professions (DNFBPs)
  • Transparency and beneficial ownership of legal persons and arrangements
  • Powers of supervisors and law enforcement authorities

Action Required

To address these concerns, IRAQ’s financial regulators will need to take swift action to implement robust AML measures. This may include:

  • Strengthening regulations
  • Increasing cooperation between government agencies
  • Improving public awareness of money laundering risks

Consequences of Inaction

  • Loss of correspondent banking relationships
  • Increased difficulty in accessing international markets

Government Response

In a statement, the Iraqi government vowed to take immediate action to address the FATF’s concerns and improve its AML regime. “We are committed to combating money laundering and terrorist financing, and we will work closely with our international partners to ensure that our financial system is secure and transparent,” said a government spokesperson.

Conclusion

The FATF assessment is a wake-up call for IRAQ to address its money laundering vulnerabilities and bring its financial system in line with international standards. Failure to do so could have serious consequences, including the loss of correspondent banking relationships and increased difficulty in accessing international markets.