Financial Crime World

Title: Iraq’s War on Financial Crime: Strategies and Challenges

Subtitle: An in-depth look at Iraq’s anti-money laundering and anti-corruption measures

By Mohamad Al-Dhia, Independent Economist, Baghdad

Iraq, a country rebuilding itself after decades of conflict and instability, is making concerted efforts to combat financial crimes and create a transparent economic system. This article sheds light on the strategies adopted by Iraqi authorities and the challenges they face in their ongoing battle against money laundering and corruption.

Iraqi authorities are employing a three-pronged approach to address the financial crime trifecta: money laundering, terrorism financing, and trade-based money laundering. One of the key elements of this approach is to stronger the legal and regulatory framework.

  • Central Bank of Iraq (CBI) Efforts: The CBI has been leading the charge, updating its Anti-Money Laundering and Counter-Terrorism Financing Regulations in 2021. CBI Governor, Alaa Hussain Al-Soudani, emphasized the importance of such regulations during a speech at the Global Forum for Money Laundering and Terrorist Financing 2021 conference: “Effective legislation and regulations are indispensable to preventing financial crime and to building confidence and trust in the Iraqi financial sector.”

Enhancing International Cooperation and Coordination

Another aspect of the Iraqi strategy revolves around enhancing international cooperation and coordination. This includes:

  • International Treaties and Agreements: Ratifying and implementing relevant international treaties and agreements, such as the Palermo Convention on the criminalization of corruption and the Financial Action Task Force (FATF) recommendations.
  • Engagement with Regional and International Organizations: Expanding engagements with organizations like the Middle East North Africa Financial Action Task Force (MENAFATF) to enhance technical expertise, risk assessment, and capacity building in this domain.

Promoting Transparency and Public Accountability

The Iraqi government has been dedicated to the promotion of transparency and public accountability through several initiatives:

  • Establishing the Integrity Commission: An independent oversight body that aims to prevent public corruption through the enforcement of ethical standards and the investigation and prosecution of related cases.
  • Implementing the Open Data Platform: An online platform providing public access to government information, thereby increasing transparency and public’s ability to engage in public affairs.

Challenges Faced by Iraqi Authorities

Despite the progress in these areas, there are challenges impeding the effectiveness of Iraqi financial crime prevention strategies:

  • Limited Resources: Insufficient resources for effective enforcement and implementation
  • Weak Enforcement Mechanisms: Lack of political will and weak institutional frameworks for enforcement and prosecution
  • High Public Perception of Corruption: A survey by the Transparency International revealed that over 79% of respondents believe corruption is a serious issue in Iraq, highlighting the need for accelerated and comprehensive efforts.

Challenges Concerning Financial Intelligence Unit

A robust and effective financial intelligence unit is crucial for an efficient anti-money laundering and anti-corruption regime. Currently, the lack of such a unit poses a significant challenge.

International Challenges

Additionally, challenges concerning the international aspects of financial crime prevention, such as foreign jurisdiction obstacles, hinder the tracing and seizing of illicit funds.

Conclusion

While Iraq has come a long way in its efforts to combat financial crimes and create a more transparent economic environment, there are still significant challenges that need to be addressed. The international community can play an important role by providing expertise, training, and support to strengthen Iraq’s legal and regulatory framework, bolster its financial intelligence capabilities, and ensure effective cooperation and coordination. This will not only benefit Iraq, but the broader international community in the fight against financial crimes.