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, indicating that public corruption significantly hinders economic development and political stability. Despite the government's efforts to combat corruption, particularly in sectors like electricity and oil, pervasive issues such as bribery and favoritism in government procurement remain prevalent, creating challenges for foreign investors. The Commission of Integrity and other institutions 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 constitute a significant portion of its GDP, although the country has faced fluctuations in growth, with a 7% increase in 2022 followed by a 2% contraction in 2023. The government plays a central role in economic management, with a large informal sector complementing the formal economy, and ongoing efforts to modernize infrastructure and attract foreign investment, particularly in energy and agriculture.

Iraq's investment climate is characterized by a mix of opportunities and challenges, with the government actively seeking to attract foreign investment to bolster local industries. However, foreign ownership is limited to 49% in federal Iraq, while the semi-autonomous Iraqi Kurdistan Region allows 100% foreign ownership, making it a more appealing destination for U.S. businesses. Despite bureaucratic hurdles and concerns over corruption, significant contracts, such as the $27 billion energy deal with TotalEnergies, highlight the potential for lucrative investments in the country.