Financial Crime World

Preventing Money Laundering and Terrorism Financing in Iraq: Key Obligations for Financial Institutions

Iraq has implemented regulations to prevent money laundering and terrorism financing, requiring financial institutions to establish and implement Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) programs. This article outlines the key obligations for financial institutions in Iraq.

Establishing AML/CFT Programs

Financial institutions must establish and implement effective AML/CFT programs, including:

Assessing Risks

  • Conduct regular risk assessments to identify potential money laundering and terrorism financing risks.
  • Develop policies and procedures to mitigate identified risks.

Implementing Policies and Procedures

  • Establish systems and internal controls to prevent money laundering and terrorism financing.
  • Train officers and employees on AML/CFT policies and procedures.

Independent Audit Function

  • Establish an independent audit function to assess the effectiveness of AML/CFT programs.

Anonymous Accounts

Financial institutions must refrain from opening or maintaining anonymous accounts or accounts under fictitious names.

Reporting Suspicious Transactions

Financial institutions must report any suspicious transactions to the Office immediately using a reporting form prepared by the Office.

International Cooperation and Financial Groups

Financial institutions are obligated to apply AML/CFT regulations at the level of the financial group, including information exchange policies and procedures within the financial group. These obligations also extend to branches and majority-owned subsidiaries operating outside Iraq.

Establishing a Special Administrative Department

Financial institutions must establish a special administrative department for combating money laundering and terrorism financing to follow up on the implementation of AML/CFT provisions and instructions.

Terrorist Funds Freezing Committee

A Terrorist Funds Freezing Committee will be formed at the Secretariat of the Bank to freeze funds of terrorists or other assets of persons designated by the UN Sanctions Committee, persons designated locally, or based on the request of another country. The committee will consist of:

  • The Deputy Governor of the Central Bank of Iraq - Chairman
  • The AML/CFT Office Director General - Deputy Chairman
  • Representatives from various government ministries and agencies

These provisions aim to prevent money laundering and terrorism financing by requiring financial institutions in Iraq to implement robust AML/CFT programs, report suspicious transactions, and cooperate with international authorities.