Financial Crime World

New Regulations Aim to Strengthen Financial Sector in Iraq

The Central Bank of Iraq (CBI) has introduced new regulations to enhance transparency, accountability, and supervision within the country’s financial sector. The measures aim to protect the integrity of banks and ensure that they operate in a responsible manner.

Key Highlights

  • Any entity engaging in activities related to micro and small business credit access or similar grant programs must obtain authorization from entities exercising governmental authority.
  • Foreign banks must comply with certain conditions before establishing a branch or representative office in Iraq.
  • The CBI will have the power to enter offices and examine accounts, books, documents, and other records of any person if there are reasonable grounds to suspect incompatible activities.

Licensing Requirements

To establish a bank in Iraq, including as a majority or wholly-owned subsidiary of a foreign bank or bank holding company, a banking license must be obtained from the CBI. Similarly, establishing a branch or representative office of a foreign bank in Iraq will require a permit from the CBI.

Requirements for Licensing Applications

Licensing applications must be submitted to the CBI in writing and accompanied by certain documents and information, including:

  • Details about the applicant’s authorized and subscribed capital
  • Names and qualifications of administrators and owners

Foreign Ownership Limits

The number of licenses for banks controlled by foreign persons is limited to six through December 31, 2008. However, there will be no limit on the number of licenses after this date.

  • Foreigners can own up to 50% of an existing or new domestic bank without counting towards the limitation.
  • Foreigners are only allowed to own banks or stock in banks if they are a bank subject to consolidated supervision by a supervisory authority in another country.

Conclusion

The new regulations introduced by the CBI aim to strengthen the financial sector in Iraq and ensure that it operates in a responsible and transparent manner. The measures will help to protect the integrity of banks, prevent money laundering and terrorist financing, and promote economic growth and stability in the country.