Financial Inclusion Takes Hold in Iraq, but Risks of Financial Crime Lurk
A Leap Towards Financial Inclusion
In one of the Middle East’s most underbanked countries, around 7 million Iraqis are now receiving welfare benefits and public sector salaries electronically through biometric debit cards. This significant step towards financial inclusion has brought much-needed convenience to the lives of citizens.
Key Statistics:
- 7 million Iraqis now receive electronic payments
- Electronic payment systems have increased the need for convenience in a heavily underbanked country
Concerns Over Financial Crime
As the Iraqi government’s reliance on electronic payments grows, so too do concerns about financial crime. Experts warn that the increased use of digital payment systems and the expansion of mobile banking could create new vulnerabilities for fraudsters and money launderers.
Risks Involved:
- Increased use of digital payment systems
- Expansion of mobile banking
- Vulnerabilities for fraudsters and money launderers
International Smart Card (ISC) - A Pioneer in Electronic Payments
International Smart Card, a Baghdad-based company that has been quietly linking Iraqis to the financial system since 2007, is at the forefront of this shift towards electronic payments. The company’s Qi Card uses biometric data, including iris scans and facial recognition, to verify users and prevent identity fraud.
Features of ISC’s Qi Card:
- Biometric verification (iris scan and facial recognition)
- Prevention of identity fraud
Challenges Faced by ISC
Despite its efforts to reduce financial crime, the company’s founder, Bahaa Abdul Hadi, acknowledges that there are still risks involved. “Definitely, there were organised crimes milking the government programmes,” he says. “In the worst case, we captured a guy with 36 different IDs.”
Challenges Faced by ISC:
- Organised crimes milking government programmes
- Capture of individuals with multiple identities
The Regional Context
Other countries in the region have struggled to prevent financial crime and money laundering as they expand their digital payment systems. In Iraq, where corruption and cronyism are rampant, the risks of financial crime are particularly high.
Regional Challenges:
- Corruption and cronyism
- Expansion of digital payment systems
- Struggle to prevent financial crime and money laundering
Conclusion
As the Iraqi government continues to push forward with its plans for financial inclusion, it will need to take a proactive approach to preventing financial crime. This could involve implementing stricter regulations and oversight, as well as investing in technology that can detect and prevent fraud.
Steps Forward:
- Implementing stricter regulations and oversight
- Investing in technology to detect and prevent fraud