Financial Crime World

Central Bank Issues New Regulation on Financing Medium, Small, and Micro Enterprises in Iraq

Introduction

The Central Bank of Iraq has issued a new regulation governing the financing of medium, small, and micro enterprises by companies in the country. This regulation aims to enhance compliance and transparency in the financial sector.

Key Changes

  • Only joint-stock companies are permitted to engage in financing medium, small, and micro enterprises, while limited companies are barred from doing so.
  • The required capital for joint-stock companies has been raised to IQD 100 billion, up from IQD 2 billion previously. Limited companies must have a minimum capital of IQD 1 billion.

Approval Process

The new regulation outlines a detailed approval process with multiple stages that companies must go through before obtaining a license to operate. The Central Bank will also have the authority to audit and supervise these companies’ activities.

Requirements for Licensed Companies

  • Establish specific administrative departments, including:
    • Financial management
    • Risk management
    • Compliance monitoring
    • Credit management
    • Anti-money laundering
    • Counter-terrorism financing
    • Internal audit
    • Financial awareness
    • Public protection
    • Complaint processing
    • Information technology
    • Legal management
  • Conclude loan contracts with clients
  • Submit periodic financial statements
  • Establish an online system for registering loan applications
  • Allocate funds to mitigate risks
  • Appoint an auditor

Loan Contracts Requirements

  • Client details
  • Loan duration and payment method
  • Interest amounts
  • Client-provided insurances
  • Loan’s purpose

Transitional Arrangements

Companies that were licensed before the issuance of the new regulation have a three-year grace period to align their operations with the new requirements.

Expert Advice

At Al Tamimi & Company, our Iraq office is dedicated to guiding clients through this transition and ensuring compliance with the new regulation. Our team of experts provides accurate and timely legal advice to help navigate these changes effectively.