Beneficial ownership transparency knowing who ultimately owns and controls companies is a cornerstone of international AML frameworks and a key area of focus in Iraq’s efforts to address FATF deficiencies. The Iraq Companies Registry has announced new requirements for beneficial ownership disclosure, and CBI AML instructions require Iraqi banks to identify and verify the beneficial owners of their corporate customers. This article explains the new beneficial ownership disclosure requirements in Iraq, their relationship to FATF Recommendation 24 and international standards, and what companies and banks must do to comply.

What is Beneficial Ownership?

A beneficial owner is the natural person who ultimately owns or controls a legal entity, the individual who is the true economic beneficiary of the entity’s assets and activities, even where ownership is held through intermediaries. In a simple company structure, the beneficial owner is typically the shareholder. In complex structures involving holding companies, trusts, or nominee arrangements, identifying the beneficial owner requires looking through the layers of ownership to identify the natural person who exercises ultimate control. International standards including FATF Recommendation 24 require countries to ensure that accurate beneficial ownership information is available to competent authorities and financial institutions.

The New Companies Registry Requirements

The Iraq Companies Registry Directorate has announced requirements for beneficial ownership disclosure that apply to companies registered in Iraq. Based on the 2026 circulars, joint stock companies are required to disclose shareholders holding 10% or more of their shares to enable the registry to assess AML risk. Limited companies are required to provide information on their shareholders and any changes in shareholding. These requirements align Iraq’s company registration system with international beneficial ownership transparency standards and are part of Iraq’s FATF action plan commitments.

FATF Recommendation 24 and Iraq

FATF Recommendation 24 requires countries to ensure that competent authorities have access to adequate, accurate, and timely information on the beneficial ownership of legal persons. This includes requirements for: a national beneficial ownership register or equivalent mechanism; obligations on companies to hold and maintain beneficial ownership information; requirements for legal professionals and financial institutions to obtain beneficial ownership information from their clients; and mechanisms for competent authorities to access beneficial ownership information promptly. Iraq’s FATF mutual evaluation identified deficiencies in beneficial ownership transparency as an area requiring improvement making beneficial ownership compliance a priority for Iraqi authorities and companies.

CBI KYC Requirements for Beneficial Ownership

Iraqi banks are required by CBI AML instructions to identify and verify the beneficial owners of their corporate customers. CBI requirements include: identifying natural persons who own or control 25% or more of the company, the threshold consistent with FATF recommendations; verifying the identity of identified beneficial owners through reliable documentary evidence; understanding the ownership and control structure of corporate customers sufficiently to identify beneficial owners; and applying enhanced due diligence where beneficial ownership is complex, opaque, or involves high-risk jurisdictions. Where beneficial ownership cannot be established, banks must escalate the relationship to senior management and consider whether to proceed with the customer relationship.

Politically Exposed Persons and Beneficial Ownership

The intersection of beneficial ownership and politically exposed persons (PEPs) is a particularly important compliance consideration in Iraq. A PEP is a natural person who is or has been entrusted with a prominent public function including senior government officials, military officers, senior judiciary, and executives of state-owned enterprises. Under FATF recommendations and CBI AML instructions, Iraqi banks must apply enhanced due diligence to PEPs and their family members and close associates. Where the beneficial owner of a corporate customer is a PEP, the bank must apply EDD including obtaining senior management approval for the relationship, establishing the source of wealth and funds, and conducting enhanced ongoing monitoring.

Practical Compliance Steps for Iraqi Companies

Iraqi companies must take the following steps to comply with beneficial ownership requirements: identify all natural persons who are beneficial owners typically those owning or controlling 10% or more as required by the Companies Registry, or 25% or more as required by bank KYC; maintain accurate records of beneficial ownership information and update them when ownership changes; provide beneficial ownership information to the Companies Registry in accordance with applicable disclosure requirements; and provide beneficial ownership information to banking institutions as part of customer due diligence. Companies that use nominee arrangements or complex structures to obscure beneficial ownership face significant compliance risk under Iraq’s evolving AML framework.

How Etihad Law Firm Assists

Etihad advises Iraqi companies on beneficial ownership identification, disclosure obligations to the Companies Registry and banking institutions, restructuring of ownership arrangements to enhance transparency, and AML compliance programme development addressing beneficial ownership requirements.