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 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, foreign investors face significant challenges due to an opaque regulatory environment and widespread bribery. The Commission of Integrity and the Board of Supreme Audit are tasked with addressing corruption, but political disputes have stalled progress, leaving many corruption cases unresolved.

Iraq's economy is primarily driven by oil exports, which form the backbone of its GDP, contributing to a growth rate of 7% in 2022, followed by a contraction of 2% in 2023. The government plays a significant role in the economy, with a large portion being directed by state ministries, while the informal, cash-based non-oil sector remains vibrant and presents various investment opportunities. Despite challenges such as bureaucratic inefficiencies and corruption, there are prospects for growth, particularly in energy and infrastructure projects.

Iraq's investment climate is characterized by a mix of opportunities and challenges. While the government has expressed a desire to attract foreign investment and has made strides in sectors like energy, foreign ownership is limited to 49% in federal Iraq, which can deter potential investors. Additionally, bureaucratic hurdles, corruption, and a complex regulatory environment pose significant challenges for both local and foreign businesses.