Financial Crime World

IRAQ BANKING REGULATIONS UPDATE: ELECTRONIC PAYMENT SERVICES GET NEW FRAMEWORK

The Iraqi Cabinet has issued a significant regulatory update for electronic payment services, aimed at strengthening the efficiency, security, and transparency of the financial sector in Iraq.

Background

The new regulation, published in the Official Gazette on April 29, 2024, replaces the previous one established in 2014, introducing several changes and enhancements. The regulation defines electronic payment services as encompassing various activities related to the execution and management of both legal and non-prohibited financial transactions through electronic means.

Key Provisions

  • Electronic payment services include fund transfers and different forms of electronic money payments.
  • Entities must obtain a license from the Central Bank of Iraq and adhere to its standards and regulations.
  • Licenses are valid for ten years and are subject to renewal upon request and approval.
  • The Central Bank holds exclusive authority over the regulation, registration, and licensing of third-party-operated electronic payment systems.

Compliance Requirements

  • Service providers must maintain records of all electronic payment transactions and related data for a minimum of five years.
  • Both service providers and the Central Bank must make these records available for inspection and audit when necessary.
  • Service providers are required to furnish financial guarantees or easily liquidatable assets for the settlement of financial transactions.

Penalties for Non-Compliance

  • Non-compliance with the regulation can result in penalties such as warnings, financial penalties, suspension, or revocation of licenses.

Impact and Benefits

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. The new regulations aim to improve the efficiency, security, and transparency of electronic payment services, enhancing consumer trust and confidence in the Iraqi financial sector.

Expert Advice and Support

Iraq-based firms seeking guidance on navigating the complexities of this regulatory update can reach out to Al Tamimi & Company’s dedicated team for expert advice and support. With extensive experience in Iraq’s financial regulations, our team is committed to helping stakeholders understand and comply with the new e-payment legal framework.