Financial Crime World

Iraq Takes Tough Stance on Money Laundering and Terrorist Financing

In a bid to combat the growing threat of financial crimes, Iraq has introduced a new draft law aimed at combating money laundering and terrorist financing.

Establishing a Public Department for Combating Financial Crimes

The Combating Money Laundering and Terrorist Financing Office will be established within the Central Bank of Iraq (CBI). This public department will have its own legal capacity and financial independence, allowing it to:

  • Receive and investigate suspicious transaction reports from financial institutions and other establishments
  • Represent Iraq in international organizations related to money laundering and terrorist financing

Committee for Freezing Terrorist Funds Established

The Committee for Freezing Terrorist Funds has been set up to freeze funds belonging to terrorists or individuals specified by the United Nations Security Council’s Counter Terrorism Committee. The committee will:

  • Receive requests from foreign countries to freeze assets of Iraqi residents
  • Make decisions on whether to comply with such requests

International Cooperation Key

The draft law places a strong emphasis on international cooperation, introducing several articles aimed at facilitating mutual judicial cooperation and extradition of criminals involved in money laundering and terrorist financing crimes. This includes:

  • The principle of reciprocity
  • Dual criminality
  • The return of assets used in these offenses
  • Exchange of information with foreign counterparts, while restricting the use of such information to combating money laundering or predicate offences

Harsher Penalties Imposed

The draft law imposes harsher penalties for individuals, legal persons, and financial institutions found guilty of money laundering and terrorist financing. The maximum penalty for money laundering has been increased to 15 years, while those convicted of terrorist financing can face life imprisonment.

Whistle-Blowing Concerns

However, the draft law lacks provisions protecting whistle-blowers who report suspicious transactions in good faith. This absence creates a disincentive for employees to come forward with information about financial crimes.

  • Despite this concern, the draft law offers exemption from punishment to those who notify authorities of a conspiracy to commit money laundering or terrorist financing offenses before it is carried out

Government’s Commitment

The Iraq government has committed to improving its laws and regulations to comply with international standards and avoid being placed on the Financial Action Task Force (FATF) blacklist. The ratification of this draft law will be closely watched, as a delay could result in severe consequences for the country’s financial sector.

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