Financial Crime World

Iraq Takes a Tough Stance on Financial Compliance to Combat Money Laundering and Terrorism Financing

In its efforts to combat money laundering and terrorism financing, Iraq has implemented a series of anti-money laundering (AML) and counter-terrorism financing (CTF) regulations. The country’s Anti-Money Laundering and Countering Terrorist Financing Law No. 39 of 2015 provides the foundation for AML and CTF efforts in Iraq.

Key Requirements for Financial Institutions in Iraq

The country’s AML regulations impose several key requirements on financial institutions and designated non-financial businesses and professions (DNFBPs). These include:

  • Customer Due Diligence: When establishing a business connection or completing a transaction worth more than a specified level, financial institutions and DNFBPs are required to complete customer due diligence (CDD) processes.
  • Know Your Customer (KYC) Rules: Covered entities must verify the identification of non-account holders who conduct transactions worth at least five million Iraqi dinars (approximately $4,250).
  • Suspicious Transaction Reporting: Entities subject to the AML regulations must notify suspicious transactions to Iraq’s financial intelligence unit (FIU) and wait for instruction before proceeding with the transaction.
  • Record-keeping: Financial institutions and DNFBPs must preserve accurate and full records of their transactions and client interactions for at least five years.
  • Internal Controls and Policies: Entities are required to adopt internal controls and policies, including processes for identifying, reporting, and managing money laundering and terrorism financing threats.
  • Training: Financial institutions and DNFBPs are expected to conduct AML training for their personnel to ensure they are aware of the dangers of money laundering and terrorism financing.

Supervisors of AML/CFT in Iraq

The Office of Combating Money Laundering and Terrorist Financing (Money Laundering Reporting Office) was established within the Central Bank of Iraq in 2007 and reconfigured in 2015 with complete independence. The office’s main responsibilities include:

  • Receiving and Investigating Reports: Receiving, acquiring, or investigating reports or information from reporting organizations concerning suspected money laundering or terrorism financing.
  • Analyzing and Communicating Information: Analyzing or communicating information to execute its duties.
  • Suspending Financial Transactions: Suspending financial transactions or operations for a maximum of seven working days if there is a concern about profits smuggling or damage to the analysis’ conduct.

Compliance Program

Financial institutions in Iraq, as well as certain non-financial businesses and professions, must have a compliance program. The program’s goals include:

  • Information Exchange: Information exchange on money laundering and terrorism financing with appropriate authorities in government departments and the public sector.
  • International Collaboration: Collaboration with international organizations and conferences dealing with money laundering and terrorism funding.
  • Database Creation: Creating a database for the AML/CFT office to use as a national center for analyzing and sharing information regarding suspected money laundering or terrorist financing.

Failure to Comply

Failure to comply with these requirements may result in significant penalties, making it essential for financial institutions and DNFBPs to take steps to ensure compliance.