Iraqi Cabinet Issues New Regulations for Electronic Payment Services
To boost efficiency, security, and transparency in Iraq’s financial sector, the country’s Cabinet has published new regulations for electronic payment services in the Official Gazette. The updated rules, effective from April 29, 2024, replace the previous regulation introduced in 2014 and introduce significant changes to strengthen the regulatory framework.
Definition of Electronic Payment Services
Under the new regulation, electronic payment services encompass various activities related to executing and managing legal and non-prohibited financial transactions through digital means. This includes:
- Fund transfers
- Electronic money payments
- Facilitated by specialized systems and technological infrastructures
License Requirements
To operate in Iraq’s electronic payment market, entities must obtain a license from the Central Bank of Iraq and adhere to its standards and regulations. The licenses are valid for ten years and can be renewed upon request and approval.
Central Bank Authority
The Central Bank has exclusive authority over regulating, registering, and licensing third-party-operated electronic payment systems, as well as supervising and monitoring their compliance with legal frameworks and regulatory standards.
Record Keeping and Financial Guarantees
The regulation requires both service providers and the Central Bank to maintain records of all electronic payment transactions and related data for a minimum of five years. These records must be made available for inspection and audit when necessary, with certified copies provided to relevant parties.
Service providers must also furnish financial guarantees or easily liquidatable assets to settle financial transactions, as stipulated by the Central Bank.
Penalties for Non-Compliance
The regulation outlines penalties for non-compliance, including:
- Warnings
- Financial penalties
- Suspension or revocation of licenses
Implementation and Enforcement
The Central Bank is empowered to issue instructions, directives, and guidelines for implementing and enforcing the regulation. Service providers are required to adjust their operations to comply within six months from the enforcement date.
Experts’ Anticipation
Experts anticipate a positive impact on Iraq’s financial sector, as the new regulations establish a comprehensive legal framework aimed at safeguarding consumers and promoting financial system stability.
By strengthening the regulatory framework for electronic payment services, Iraq is taking a significant step towards enhancing the efficiency, security, and transparency of its financial sector.