Iraq’s Financial Institution Security Protocols Under Scrutiny as Cabinet Issues Regulatory Update
In a bid to strengthen the efficiency, security, and transparency of Iraq’s financial sector, the country’s Cabinet has issued a significant regulatory update concerning electronic payment services for funds. The new regulation, published in the Official Gazette on April 29, 2024, replaces the previous one established in 2014 and introduces a range of changes and enhancements aimed at safeguarding consumers and fostering financial system stability.
What is Included in Electronic Payment Services?
According to the regulation, electronic payment services encompass various activities related to the execution and management of both legal and non-prohibited financial transactions through electronic means. This includes:
- Fund transfers
- Different forms of electronic money payments
- All facilitated and overseen by specifically tailored systems and technological infrastructures
Licensing Requirements for Electronic Payment Services
Entities intending to offer electronic payment services are required to obtain a license from the Central Bank of Iraq and adhere to its standards and regulations. The licenses are valid for a period of ten years and are subject to renewal upon request and approval.
Central Bank Oversight and Regulation
The Central Bank holds exclusive authority over the regulation, registration, and licensing of third-party-operated electronic payment systems, as well as the supervision and monitoring of their compliance with legal frameworks and regulatory standards.
Record-Keeping and Financial Guarantees
Under the new regulations, both service providers and the Central Bank of Iraq must maintain records of all electronic payment transactions and related data for a minimum of five years. These records must be made available for inspection and audit when necessary, with certified copies provided to relevant parties.
Service providers are also required to furnish financial guarantees or easily liquidatable assets for the settlement of financial transactions, in accordance with the Central Bank’s stipulations.
Penalties for Non-Compliance
In the event of non-compliance, the regulation outlines penalties such as:
- Warnings
- Financial penalties
- Suspension
- Revocation of licenses
The Central Bank is also empowered to issue instructions, directives, and guidelines for the implementation and enforcement of the regulation.
Positive Impact on Iraq’s Financial Sector
The anticipated impact of this regulation is notably positive, as it establishes a comprehensive legal framework aimed at safeguarding consumers and fostering financial system stability in Iraq.
Seek Guidance from Al Tamimi & Company
For further guidance and information on this topic, please contact Al Tamimi & Company’s Iraq office, experienced in navigating the intricacies of the country’s financial regulations. Our dedicated team are committed to guiding stakeholders through the complexities of Iraq’s financial landscape, ensuring comprehensive support and understanding of the new e-payment legal framework.