FATF status

Iraq was removed from the FATF List of Countries that have been identified as having strategic AML deficiencies on 29 June 2018.

Latest FATF Statement - 29 June 2018

The FATF welcomes Iraq’s significant progress in improving its AML/CFT regime and notes that Iraq has established the legal and regulatory framework to meet the commitments in its action plan regarding the strategic deficiencies that the FATF identified in October 2013. Iraq is therefore no longer subject to the FATF’s monitoring process under its ongoing global AML/CFT compliance process. Iraq will work with MENAFATF to improve further its AML/CFT regime.

European Commission list of countries with strategic deficiencies in their AML/CFT regimes

Iraq was removed from the EU Commission list of high risk countries in March 2022.

Compliance with FATF Recommendations

It should be noted that the new style FATF Mutual Evaluation has not yet been undertaken.

The last Mutual Evaluation Report relating to the implementation of anti-money laundering and counter-terrorist financing standards in Iraq was undertaken by the Financial Action Task Force (FATF) in 2013. According to that Evaluation, Iraq was deemed Compliant for 2 and Largely Compliant for 1 of the FATF 40 + 9 Recommendations. It was Partially Compliant or Non-Compliant for all 6 of the Core Recommendations.

In 2018, it was recognised that Iraq had made significant progress in addressing deficiencies identified in its original Mutual Evaluation report and, therefore, it was decided that the country should be removed from the regular follow-up process.

Iraq ranks 154th out of 180 in Transparency International's 2023 Corruption Perception Index, highlighting pervasive public corruption that hinders economic development and political stability. Despite efforts by the Government of Iraq (GOI) to combat corruption, particularly in sectors like electricity and oil, challenges remain, including bribery and the need for foreign investors to navigate a complex regulatory environment. Although institutions like the Commission of Integrity and the Board of Supreme Audit exist to address corruption, their effectiveness is undermined by political disputes and a lack of enforcement, leaving businesses to contend with a deeply entrenched culture of corruption.

Iraq's economy is primarily driven by oil exports, which form the backbone of its GDP, and is heavily influenced by a legacy of centralized decision-making. The GDP grew by 7% in 2022 but contracted by 2% in 2023, with a moderate growth forecast for 2024; inflation rates have remained relatively stable at around 4%. Despite challenges such as corruption and bureaucratic inefficiencies, there are opportunities for investment, particularly in energy and infrastructure projects.

Iraq's investment climate is characterized by a desire to attract foreign investment, particularly in the semi-autonomous Iraqi Kurdistan Region (IKR), where foreign companies can maintain 100% ownership compared to a 49% limit in federal Iraq. Despite challenges such as bureaucratic barriers, corruption, and a complex regulatory environment, there are significant opportunities in sectors like energy, agriculture, and infrastructure, highlighted by a $27 billion energy deal with TotalEnergies in 2023. The government has made strides in improving the investment landscape, including signing the UN Singapore Convention on commercial mediation in 2024.