Financial Crime World

Iraq’s Anti-Money Laundering and Counter-Terrorism Financing Law: Key Provisions

The Iraqi government has introduced a new law aimed at combating money laundering and terrorism financing. The Anti-Money Laundering and Counter-Terrorism Financing Law (AML/CFT) is designed to prevent the misuse of financial systems for illegal activities.

Obligations of Financial Institutions

Financial institutions, including banks and non-bank financial institutions, are required to implement strict measures to prevent money laundering and terrorism financing. These measures include:

  • Conducting customer due diligence and ongoing monitoring: Financial institutions must gather information about their customers and continuously monitor transactions to identify suspicious activities.
  • Reporting suspicious transactions to the Anti-Money Laundering Office (AMLO): Institutions must report any suspicious transactions to the AMLO, which will investigate and take appropriate action.
  • Refraining from dealing with shell banks or correspondent financial institutions that allow their accounts to be used by shell banks: Financial institutions are prohibited from engaging in business with shell banks or correspondent institutions that facilitate illegal activities.
  • Abiding by international sanctions imposed on individuals and entities designated as terrorists: Institutions must comply with international sanctions and refrain from conducting transactions with designated terrorist organizations.

Anti-Money Laundering and Counter-Terrorism Financing Office

The Anti-Money Launderling and Counter-Terrorism Financing Office (AMLO) is responsible for implementing the AML/CFT law and monitoring compliance with its provisions. The office will also provide guidance to financial institutions and conduct inspections to ensure that they are meeting their obligations under the law.

Terrorist Funds Freezing Committee

A new committee, known as the Terrorist Funds Freezing Committee, has been established to oversee the freezing of funds and assets of individuals and entities designated by the UN Sanctions Committee or locally designated terrorist organizations. The committee will be responsible for reviewing requests from other countries to freeze assets and will have the power to make decisions on behalf of Iraq.

Implementation and Enforcement

The AML/CFT law will come into effect one year after its publication in the Official Gazette. Financial institutions are required to implement the measures outlined in the law within six months of its coming into effect. The law provides for penalties and fines for non-compliance with its provisions, including imprisonment and fines.

Key Provisions

  • Article 1: Definition of money laundering and terrorism financing: Defines the crimes of money laundering and terrorism financing.
  • Article 2: Obligations of financial institutions to prevent money laundering and terrorism financing: Outlines the measures that financial institutions must take to prevent illegal activities.
  • Article 3: Anti-Money Launderling Office (AMLO): Establishes the AMLO as the responsible authority for implementing the AML/CFT law.
  • Article 4: Reporting suspicious transactions: Requires financial institutions to report suspicious transactions to the AMLO.
  • Article 5: Refraining from dealing with shell banks or correspondent financial institutions that allow their accounts to be used by shell banks: Prohibits financial institutions from engaging in business with shell banks or correspondent institutions that facilitate illegal activities.
  • Article 6: Abiding by international sanctions imposed on individuals and entities designated as terrorists: Requires compliance with international sanctions against terrorist organizations.
  • Article 7: Terrorist Funds Freezing Committee: Establishes the committee responsible for overseeing the freezing of funds and assets of designated individuals and entities.
  • Article 8: Implementation and enforcement of the law: Outlines the implementation and enforcement mechanisms of the AML/CFT law.

The AML/CFT law is an important step in Iraq’s efforts to combat money laundering and terrorism financing. Its implementation will help to strengthen the country’s financial system and prevent the misuse of its financial institutions for illegal activities.