Financial Crime World

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Financial Crimes on the Rise in Iraq: Types of Illegal Activities Exposed

Iraq has been grappling with a growing number of financial crimes, including money laundering and terrorist financing. To combat these illegal activities, the country has implemented a range of anti-money laundering (AML) and counter-terrorism financing (CTF) laws and regulations.

Anti-Money Laundering and Countering Terrorist Financing Law

The Anti-Money Laundering and Countering Terrorist Financing Law No. 39 of 2015 is the key legislative framework for AML and CTF in Iraq. This law sets out a comprehensive framework for preventing, detecting, and punishing money laundering and terrorist financing in the country.

Regulations for Financial Institutions and Businesses

Financial institutions, non-financial businesses, professions, and designated non-financial businesses and professions (DNFBPs) are subject to strict regulations aimed at preventing financial crimes. Some of the key requirements include:

  • Customer Due Diligence: Financial institutions and DNFBPs must conduct customer due diligence when establishing a business connection or completing a transaction worth over a certain level.
  • Know Your Customer (KYC) Rules: Covered entities must verify the identification of non-account holders who conduct transactions worth at least five million Iraqi dinars, approximately $4,250. Beneficial owners must be recognized when creating an account and transacting more than 10 million Iraqi dinars, roughly $8,500.
  • Suspicious Transaction Reporting: Entities subject to AML regulations must report suspicious transactions to Iraq’s financial intelligence unit (FIU) and freeze the relevant funds until guidance is obtained.
  • Record-keeping: Financial institutions and DNFBPs must preserve accurate and full records of their transactions and client interactions for at least five years.
  • Internal Controls and Policies: Covered entities must adopt internal controls and policies to achieve compliance with AML rules, including processes for identifying, reporting, and managing money laundering and terrorism financing threats.
  • Training: Financial institutions and DNFBPs are required to conduct AML training for their personnel to ensure they are aware of the dangers of money laundering and terrorism financing.

Office of Combating Money Laundering and Terrorist Financing

The Office of Combating Money Launderling and Terrorist Financing (Money Laundering Reporting Office) plays a crucial role in implementing AML and CTF regulations. The office receives, analyzes, and investigates reports of suspicious transactions, suspends financial transactions if necessary, and transmits communications to initiate legal action.

Compliance Programs

Financial institutions and certain non-financial businesses and professions must also establish compliance programs to ensure they are in line with AML and CTF regulations. These initiatives will help Iraq achieve its goals of exchanging information on money laundering and terrorism financing, participating in international organizations, creating a database for the AML/CTF office, and providing technical guidance.

Consequences of Non-Compliance

Failure to comply with these requirements can result in severe penalties, making it essential for financial institutions and businesses to take precautions to ensure compliance.