Iraq Steps Up Efforts to Combat Money Laundering and Terrorist Financing
Strengthening Anti-Money Laundering and Counter-Terrorism Financing Laws
In a bid to enhance its anti-money laundering (AML) and counter-terrorism financing (CFT) laws, the Iraqi government has drafted a new law aimed at combating these crimes. The Combating Money Laundering and Terrorist Financing Office, a public department with legal capacity and financial independence, will be established within the Central Bank of Iraq to receive and deal with suspicious transaction reports.
Key Provisions
- The office will represent Iraq in international organizations and conferences related to money laundering and terrorist financing.
- The Committee for Freezing Terrorist Funds will be responsible for freezing funds belonging to terrorists or individuals designated by the United Nations Security Council’s Counter Terrorism Committee.
- The committee will review requests from foreign countries regarding asset freezing of Iraqi residents and decide whether to freeze assets based on international standards.
International Cooperation Crucial
The draft law addresses concerns about international cooperation and extradition, introducing new articles that specify the conditions under which Iraq will cooperate with other countries in combating money laundering and terrorist financing crimes. These conditions include:
- Dual criminality: The offence alleged must be a crime in both countries.
- Reciprocity: Countries must have similar laws in place to combat these crimes.
- International standards: Decisions will be made based on international standards.
Iraq has also agreed to execute foreign judgments for confiscation in respect of money laundering and terrorist financing, subject to the rights of bona fide third parties.
Tougher Penalties Imposed
The draft law introduces harsher penalties than the current law for individuals, legal persons, and financial institutions found guilty of:
- Money laundering: Up to 15 years in prison.
- Terrorist financing: Life imprisonment.
Procedural actions will also be taken against violators, including:
- Withdrawal of licenses
- Restrictions on management powers
- Prohibition from practicing in the same field of work for a certain period
Exclusion of Liability and Whistle-Blowing Protection
The draft law provides for exclusion of liability for individuals who report suspicious transactions or violations in good faith. However, whistle-blowing protection is not explicitly mentioned, which has raised concerns among experts.
To address this issue, the draft law offers exemption from punishment for those who notify authorities of a conspiracy to commit money laundering or terrorist financing offenses before the crime is committed.
Conclusion
The draft law marks a significant step forward in Iraq’s efforts to combat money laundering and terrorist financing. With its establishment of specialized committees and introduction of tougher penalties, Baghdad is demonstrating its commitment to complying with international standards and avoiding being placed on the Financial Action Task Force (FATF) blacklist.
As the law becomes operational, it will be closely watched by financial crime experts in the Middle East region.