Local Expertise, Global Standards
Iraq|UAE|KSA

Business Laws in Iraq

Post By: Mustafa Muayad - Founder & Managing Partner mustafa.muayad@muayadandassociates.com Print Post

Business Laws in Iraq

Over the last few years, Iraq has come across as one of the most sought-after places to invest in for foreign investors located globally. And why not? The unprecedented economic growth, political stability, and abundant oil resources have made it a top choice for investors to set up their business here or work in partnership with Iraqis to grow their business and make profits.

Although Iraq is an ideal place to invest at present, foreign investors need to understand Iraq’s business laws before starting their operations in the country. This is much needed to know your rights and ensure that you work in conformance with the regulations and don’t violate them, resulting in penalties and legal complexities.

Here is the overview of business laws in Iraq from different perspectives:

Banking

In terms of banking laws, the Central Bank of Iraq has stopped issuing registration approvals to foreigners or locals who intend to register and establish a foreign or local bank in Iraq. However, there is only an exception for Islamic banks and exchange companies. For example, if five exchange companies are combined into one entity, they can be granted a bank registration approval from the Central Bank of Iraq.

Similarly, according to the new regulations, a foreign bank shall be granted the ability to set up an Islamic bank in Iraq because these banks have the right to register offices and branches both onshore and offshore.

However, to begin the process, a clear plan of the Islamic Bank should be provided with the annual strategy. This plan should be submitted to the CBI to get approval. Moreover, along with the supervision of the competent authorities in the country, these branches will be directly supervised by the CBI in accordance with an agreement prepared.

 

Anti-Money Laundering Law

The anti-money laundering law is also essential to understand for investors. The law governs financial institutions in connection with financing crime, money laundering, and financing terrorism. It makes the crime to launder money or structure transactions. Here’s what you need to understand about the money-laundering penalties in Iraq:

If someone:

  • conducts or attempts to conduct a financial transaction that results in proceeds from unlawful activities knowingly,
  • transports funds or any other money instrument that results from unlawful activities,
  • promotes unlawful activities for benefits or to protect from prosecution of those who have been involved in illegal activity,
  • knows that the transaction is in whole or partly designed to disguise the nature, source, ownership, location or to control proceeds of unlawful activities, or to avoid a transaction or reporting requirement,

They shall all be sentenced to a fine of approximately 40 million Iraqi dinars or twice the property value involved in the transaction—whichever amount is greater.

Financing of Crime

Suppose you finance a crime knowing or intending that such property will be used in carrying out or preparing for a violation of the law. In that case, you shall be fined 20 million Iraqi dinars or imprisonment for two years, and in some situations, even both (penalty and prison).

Terrorist Financing

Suppose you engage in or invite another person to engage in activities used in whole or in part to benefit a terrorist group or harm the public. In that case, they shall be fined 20 million Iraqi dinars or face imprisonment of 2 years or both.

Insurance Laws

Insurance is divided into two categories in Iraq. These are life and general insurance. The life insurance category covers death insurance, health, and personal injury insurance, while general insurance includes car insurance, agricultural insurance, fire insurance, engineering insurance, and marine insurance. If you want to carry out insurance activities in Iraq, you must first get licensed, which is renewed yearly.

It’s crucial to note that there is only one authority and the independent governmental entity that regulates and supervises insurance activities/sectors in Iraq, it is known as Iraqi Insurance Diwan (IID). It grants licenses to practice insurance activities in Iraq.

Under the insurance law, the insurer:

  • Must act in good faith and disclose all their confidential and complete information to the Iraqi Insurance Diwan.
  • Must provide accurate and transparent information about their insurance services.
  • Take all the required precautions to avoid money laundering, keep customer compliant records safe and respond to customer complaints within 15 days.
  • Inform the Iraqi Insurance Diwan about any change to the information they have submitted earlier primarily related to their location.

Also, from the financial perspective, insurers must inform the Iraqi Insurance Diwan of the following information regularly:

  • Report of their financial activities in Iraq for each year, financial statement, budget, and its general and detailed records of losses and profits.
  • A copy of the yearly report of the auditor.
  • A report every three months of its financial practices for the last three months.

For more information or legal assistance, contact us today. Our experienced law firm in Iraq is here to help.


Article written by :

Mustafa Muayad
mustafa.muayad@muayadandassociates.com

Founder & Managing Partner
Muayad & Associates