Answer ... Money laundering is governed by the Anti-money Laundering and Counter-Terrorism Financing Law (39/2015).
Payment service providers and other parties that undertake financial activities or execute transactions for or on behalf of customers are obliged to take all necessary customer due diligence measures before or in the course of opening an account or establishing a business relationship, and before carrying out a transaction or a wire transfer above a certain threshold for an incidental customer. Such financial activities or transactions include the following:
- accepting deposits and other repayable funds from the public, including private banking services;
- providing money or value transfer services;
- issuing and managing means of payment, such as credit and debit cards, bills, traveller’s cheques and electronic money;
- trading in money market instruments, financial derivatives, foreign exchange and securities;
- investing, administering or managing funds; and
- concluding life insurance contracts and other types of investment-related insurance as a provider or broker of the insurance contract.
Financial institutions must also, among other things, adhere to the following obligations:
- Establish and implement anti-money laundering and counter-terrorism financing programmes;
- Establish policies, procedures, systems and internal controls to assess and mitigate risks;
- Provide supervisory authorities with such risk assessment;
- Establish an independent audit function to assess the effectiveness of policies and procedures and their implementation;
- Report any suspicious transactions; and
- Refrain from opening anonymous accounts and from dealing with persons who are subject to international or local sanctions.
Financial institutions must adhere to these obligations at the level of the financial group, including branches and majority-owned subsidiaries of institutions operating outside Iraq, as long as these provisions do not contradict to provisions of laws in effect in the other country.
Other financial crimes are regulated under:
- the Criminal Code (111/1969);
- the Law on Integrity and Illegitimate Gain (30/2011);
- the Income Tax Law (113/1982);
- the Regulation on Trading on the Stock Exchange (16/2011); and
- bilateral and multilateral cooperation agreements signed by Iraq.
Such crimes include breach of trust, forgery, fraud, bribery, corruption, embezzlement, market manipulation, insider trading and tax evasion.
The main challenge for fintechs that specifically provide payment services is to ensure compliance with applicable financial laws and regulations, given the money laundering, terrorist financing and tax evasion risks associated with online payments and money transfers.