Iraq has enacted a variety of anti-money laundering (AML) and counter-terrorism financing (CTF) legislation and regulations. These policies are intended to deter, identify, and punish money laundering and terrorist funding in the country.
The Anti-Money Laundering and Countering Terrorist Financing Law No. 39 of 2015 is the basic legislative framework for AML and CTF in Iraq. This law establishes a comprehensive framework for preventing, detecting, and punishing money laundering and terrorist financing in Iraq.
Key Requirements of Iraq's Anti-Money Laundering Regulations
These criteria apply to financial institutions, non-financial businesses, professions, and designated non-financial businesses and professions (DNFBPs).
The following are some of the essential criteria of Iraq's AML regulations:
Customer Due Diligence
When establishing a business connection or completing a transaction that exceeds a specific level, financial institutions and DNFBPs are expected to complete customer due diligence (CDD) processes. CDD measures may involve verifying clients' identities as well as the purpose and nature of the business partnership or transaction.
Know Your Customer (KYC) Rules
Covered entities must verify the identification of non-account holders who conduct a transaction or series of transactions worth at least five million Iraqi dinars (about $4,250). Beneficial owners must be recognized when creating an account and transacting more than 10 million Iraqi dinars (roughly $8,500). In practice, most banks open accounts based on current client referrals and/or job verification. The laws' actual application varies greatly between Iraq's 39 state-owned and private banks.
Suspicious Transaction Reporting
Entities subject to the AMLA must notify suspicious transactions to Iraq's financial intelligence unit (FIU) of suspicious transactions and wait for instruction before proceeding with the transaction; until guidance is obtained, the relevant funds are frozen. Suspicious transaction reports (STRs) must be completed for any transactions involving funds derived from illegal activities or money laundering, intended for the financing of crime (including terrorism), or over which a criminal organization has disposal power, or a transaction conducted to evade any law or with no apparent business or other lawful purposes.
Record-keeping
Financial institutions and DNFBPs must preserve accurate and full records of their transactions and client interactions. These documents must be preserved for at least five years.
Internal Controls and Policies
To achieve compliance with AML rules, financial institutions and DNFBPs must adopt internal controls and policies, including policies and 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 in order to ensure that they are aware of the dangers of money laundering and terrorism financing, as well as how to detect and report suspicious activity.
Supervisors of AML/CFT in Iraq
Office of Anti-Money Laundering and Counter-Terrorism Financing
The Office of Combating Money Laundering and Terrorism Financing (Money Laundering Reporting Office) was established within the structure of the Central Bank of Iraq in 2007 and was reconfigured in 2015 with complete independence following the issuance of Anti-Money Laundering and Terrorism Financing Law No. 39.
According to the law, the Office of Combating Money Laundering and Terrorist Financing should be constituted at the level of a public department in the Central Bank of Iraq, with professional and ethical standards as well as financial and administrative independence.
Role of the Office of Anti-Money Laundering and Countering Financing of Terrorism in Iraq
This office's main requirements are as follows:
- Receiving, acquiring, or investigating reports or information from reporting organizations concerning operations suspected of including original criminal proceeds, money laundering, or terrorism funding.
- Information analysis or communication. To execute its duties, the AML/CFT office must get any additional information deemed essential for undertaking the analysis from the reporting organizations.
- Suspension of financial transactions or operations for a maximum of 7 working days if there is a worry about profits smuggling or damage to the analysis' conduct.
- Transmission of communications based on reasonable suspicion of money laundering, terrorism financing, or predicate offenses, with the Presidency of the Public Prosecutor initiating legal action and informing the appropriate authorities.
Compliance Program
Financial institutions in Iraq, as well as certain non-financial businesses and professions, must have a compliance program. These initiatives will work together to help Iraq achieve the following goals:
- Information exchange on money laundering and terrorism financing with appropriate authorities in government departments and the public sector, as well as collaboration with them.
- Participation in the participation of the Republic of Iraq in international organizations and conferences dealing with money laundering and terrorism funding.
- 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, as well as supporting judicial authorities in implementing the law's requirements.
- Creating and analyzing precise statistics on matters pertaining to the AML/CFT Office's functions.
- Organizing training sessions for the concerned staff in order to keep them up to date on new developments in the field of money laundering and terrorism financing.
- Notifications to regulatory authorities or other competent authorities of any financial institution or non-financial organizations and occupations that breach the provisions of the AML/CFT statute.
- Providing technical guidance in relation to money laundering and terrorism financing agreements and treaties.
Financial institutions and enterprises should take precautions to guarantee compliance with these requirements, such as performing customer due diligence, record keeping, and suspicious transaction reporting. Failure to comply might result in hefty penalties; thus, compliance must be taken seriously. You may ensure that your firm is in compliance with Iraq's anti-money laundering legislation with Sanction Scanner solutions.
