Iraq Country Summary

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

The last Mutual Evaluation Report relating to the implementation of anti-money laundering and counter-terrorist financing standards in Iraq was undertaken in 2024. According to that Evaluation, Iraq was deemed Compliant for 14 and Largely Compliant for 13 of the FATF 40 Recommendations. It was deemed Highly Effective for 0 and Substantially Effective for 2 of the Effectiveness ratings.

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, foreign investors face significant challenges due to systemic corruption in government procurement and the opaque regulatory environment. Institutions such as 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 foundation of its GDP. Despite experiencing a GDP growth of 7% in 2022, the economy contracted by 2% in 2023, with moderate growth expected in 2024. The government plays a significant role in the economy, with bloated ministries controlling a large portion, while a vibrant informal sector exists alongside challenges such as corruption and bureaucratic inefficiencies.

Iraq's investment climate is characterized by a desire to attract foreign investment, particularly in sectors like energy and infrastructure, despite bureaucratic barriers and a complex regulatory environment. The Iraqi Kurdistan Region offers a more favorable investment landscape, allowing 100% foreign ownership, while federal Iraq limits foreign ownership to 49%. Challenges such as corruption, delays in payments, and a lack of financial services persist, but opportunities remain for U.S. exporters and foreign investors, especially in government contracts and energy projects.