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Iraq Financial Services Regulatory Updates

Iraq’s transformation has been marked by numerous setbacks, exposing the country’s institutional shortcomings. The nation relies heavily on oil, with almost its entire state revenue coming from exports, making it one of the world’s weakest public finance systems.

Challenges in the Private Sector

The private sector’s financing capabilities are underdeveloped compared to international standards. The public lacks confidence in financial intermediaries such as state and private banks, and other financial service providers. State actors dominate private sector activity, hindering the country’s economic recovery.

Efforts to Improve Public Finances

Efforts are underway to improve public finances and reduce Iraq’s dependence on oil exports. These efforts include:

• Drafting a tax reform in collaboration with the federal tax authority
• Modernizing the taxpayer registration system
• Preparing draft budgets
• Improving management and control
• Strengthening the supreme audit institution to efficiently monitor financial resource distribution and utilization

Combating Money Laundering

The initiative is also supporting organizations that detect and prevent money laundering. These efforts include:

• Developing risk analyses in collaboration with the Anti-Money Laundering and Countering Financing of Terrorism Office and the Federal Commission of Integrity
• Focusing on money laundering risks in the financial sector

Promoting Lending to the Private Sector

The project aims to improve lending to the private sector, particularly for small and medium-sized enterprises. This includes working with:

• The Central Bank
• Various banks
• Digital financial intermediaries

This effort is crucial in promoting economic growth and reducing Iraq’s reliance on oil exports.

Last updated: July 2023