IRAQ TIGHTENS ANTI-MONEY LAUNDERING AND COUNTER-TERRORISM FINANCING LEGISLATION

Iraq has strengthened its efforts against money laundering and terrorist financing by establishing a comprehensive framework of anti-money laundering (AML) and counter-terrorism financing (CTF) policies and procedures.

The Cornerstone of Iraq’s AML/CTF Regime

The Anti-Money Laundering and Countering Terrorist Financing Law No. 39 of 2015 serves as the cornerstone of Iraq’s AML/CTF regime, outlining measures to prevent, detect, and punish money laundering and terrorist financing activities within the country.

Key Requirements of Iraq’s Anti-Money Laundering Regulations

• Customer Due Diligence: Financial institutions and non-financial businesses and professions (DNFBPs) are required to complete customer due diligence processes when establishing a business connection or completing transactions exceeding certain thresholds.
• Know Your Customer (KYC) Rules: Covered entities must verify the identification of non-account holders conducting transactions worth at least five million Iraqi dinars, as well as recognize beneficial owners when creating accounts and transacting more than 10 million Iraqi dinars.
• Suspicious Transaction Reporting: Entities subject to AML regulations are required to notify Iraq’s financial intelligence unit (FIU) of suspicious transactions and wait for instruction before proceeding with the transaction. Funds are frozen until guidance is obtained, and reports must be completed for transactions involving funds derived from illegal activities or intended for terrorist financing.
• Record-keeping: Financial institutions and DNFBPs must maintain accurate and complete records of their transactions and client interactions for at least five years.
• Internal Controls and Policies: Entities must adopt internal controls and policies to identify, report, and manage money laundering and terrorism financing threats.

The Role of the Office of Anti-Money Laundering and Countering Financing of Terrorism (AML/CFT)

The AML/CFT office plays a crucial role in implementing Iraq’s AML/CTF regime. Its key responsibilities include:

• Receiving and Investigating Reports: Receiving and investigating reports of suspected money laundering or terrorist financing activities
• Analyzing Information: Analyzing information and communicating with reporting organizations to obtain additional data
• Suspending Financial Transactions: Suspending financial transactions or operations for up to seven working days if there is suspicion of money laundering or terrorism financing

Compliance Requirements

To ensure compliance, financial institutions and certain non-financial businesses and professions must:

• Information Exchange: Establish information exchange on money laundering and terrorism financing with relevant authorities
• Participation in International Organizations: Participate in international organizations and conferences dealing with these issues
• Database Creation: Create a database for the AML/CFT office to share information and support judicial authorities

Training and Awareness

Financial institutions and non-financial businesses and professions must also conduct regular training sessions for their personnel to ensure they are aware of the dangers of money laundering and terrorism financing, as well as how to detect and report suspicious activity.

Consequences of Non-Compliance

Failure to comply with Iraq’s AML/CTF regulations may result in severe penalties, highlighting the importance of ensuring that firms take compliance seriously. Sanction Scanner solutions can help financial institutions and non-financial businesses and professions ensure compliance with Iraq’s anti-money laundering legislation.