Iraq Banking Regulations: A Look at the Laws Governing the Industry

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Iraq’s banking sector has undergone significant changes since the passage of Banking Law No. 94 in 2004, aimed at regulating and standardizing banking activities in the country.

Definition of Key Terms

The law defines key terms such as:

• “Bank”: a financial institution that provides banking services to its customers.
• “Branch”: a separate division of a bank located in a different geographic area.
• “Representative Office”: an office established by a foreign bank in Iraq for the purpose of providing representation and support to its clients.
• “Qualifying Holding”: a holding that meets certain requirements, such as being at least 10% of the bank’s capital.

Regulatory Objectives

The law outlines regulatory objectives, including:

• Promoting the stability and efficiency of the financial system
• Protecting depositors’ funds
• Supporting economic growth in Iraq

Prohibitions and Requirements

Banks are prohibited from engaging in certain activities, such as:

• Accepting deposits without a valid license
• Operating without a registered agent

The law also requires banks to obtain licenses and permits before commencing operations or establishing new offices.

Capital Requirements

Iraqi banks must maintain minimum capital requirements to ensure their stability and solvency. The law sets out specific rules for the management of a bank, including:

• Composition and responsibilities of the board of directors
• Senior management structure
• Audit committee composition and responsibilities

Ownership and Acquisition Rules

The law regulates changes in ownership and acquisition of qualifying holdings.

General Banking Principles

The law establishes general banking principles, outlining the activities that banks are permitted to conduct and those that are prohibited. Prudential requirements, such as:

• Limits on large exposures
• Capital adequacy ratios
• Liquidity requirements

are also set out to ensure the stability of the financial system.

Overall, Banking Law No. 94 aims to create a stable and efficient banking sector in Iraq by setting out clear regulations and guidelines for banks to follow.