Letters of Credit (LCs)
Letters of Credit are the main mechanism for settling cross-border trade payments in Iraq, particularly for importing machinery, materials, and industrial goods. LCs offer assurance to foreign exporters that they will receive payment once contractual and shipping conditions are met. Because Iraqi trade financing involves regulatory, currency, and sanctions considerations, LCs remain essential to reduce counterparty risk and ensure the legal enforceability of payment obligations.
Within Iraq, LCs are frequently used in supply contracts within oilfield services, infrastructure procurement, and development projects involving foreign suppliers.
Common scenarios requiring LCs:
- Supply contract/proforma invoice
- Commercial invoice
- Trade licenses and permits
- Packing list / shipping documentation
- Bank application forms
- KYC & AML documentation
Documentation required from the applicant:
- Contract/tender documents
- Corporate licenses & registration documents
- Financial statements or credit profile
- Indemnity agreements & bank forms
- Collateral or security (if required by bank)
- KYC & AML documentation
CBI compliance expectations
- Verify legitimacy of the underlying transaction
- Apply AML/CFT and sanctions screening
- Assess the importer’s creditworthiness
- Review trade documentation for discrepancies
- Apply foreign currency allocation rules where relevant
- Maintain records and reporting as per regulatory guidance
How Etihad Can Assist
Etihad provides legal and regulatory advisory services to banks, financial institutions, and businesses, supporting compliance with applicable laws, regulations, and regulatory guidance issued by any competent authorities.