Iraq has implemented a range of legislation and regulations to combat money laundering (ML) and counter-terrorism financing (CTF). These measures aim to prevent, detect, and penalize the acts of money laundering and funding of terrorist activities within the country.

The fundamental legal framework for ML and CTF in Iraq is the Anti-Money Laundering and Countering Terrorist Financing Law No. 39 of 2015. This law establishes a comprehensive framework to address ML and CTF, covering prevention, detection, and punishment. The key features of Iraq’s AML regulations include:

Customer Due Diligence (CDD) Financial institutions and designated non-financial businesses and professions (DNFBPs) are required to conduct CDD processes when establishing business relationships or conducting transactions that exceed a certain threshold. CDD measures involve verifying the identities of clients and understanding the purpose and nature of the business relationship or transaction.

Know Your Customer (KYC) Requirements Entities subject to the regulations must verify the identities of non-account holders involved in transactions or series of transactions valued at least five million Iraqi dinars (approximately $4,250). Additionally, for account holders engaging in transactions exceeding 10 million Iraqi dinars (approximately $8,500), the identification of beneficial owners must be established. In practice, account opening procedures in Iraq’s state-owned and private banks often rely on client referrals and job verification, with significant variations in the application of the law.

Suspicious Transaction Reporting Entities covered by the AML regulations must report suspicious transactions to Iraq’s financial intelligence unit (FIU) and await instructions before proceeding with the transaction. Pending guidance, the relevant funds must be frozen. Suspicious transaction reports (STRs) must be filed for transactions involving proceeds from illegal activities or ML, funds intended for criminal financing (including terrorism), transactions controlled by criminal organizations, or transactions conducted to evade the law or lacking legitimate business purposes.

Record-Keeping Financial institutions and DNFBPs are required to maintain complete and accurate records of their transactions and customer interactions. These records must be retained for a minimum of five years.

Internal Controls and Policies To ensure compliance with AML regulations, financial institutions and DNFBPs must establish internal controls and policies that encompass the identification, reporting, and management of ML and CTF risks.

Training Financial institutions and DNFBPs are expected to provide AML training to their personnel to raise awareness about the risks associated with ML and CTF. Training programs equip employees with knowledge on how to identify and report suspicious activities.

Overall, these measures aim to strengthen Iraq’s capacity to combat money laundering and terrorist financing activities effectively.

The Money Laundering Reporting Office, also known as the Office of Combating Money Laundering and Terrorism Financing, was initially established as part of the Central Bank of Iraq in 2007. In 2015, it underwent restructuring to attain complete independence following the enactment of Anti-Money Laundering and Terrorism Financing Law No. 39.

As per the law, the Office of Combating Money Laundering and Terrorist Financing is mandated to operate as a public department within the Central Bank of Iraq. It is required to adhere to professional and ethical standards while maintaining financial and administrative autonomy.