Updated Regulations on Bank Mergers and Consolidation
Central Bank of Iraq Issues Updated Regulations on Bank Mergers and Consolidation The Central Bank of Iraq (CBI) has issued an official circular addressed to all licensed banks, announcing amendments to the regulations governing bank mergers and consolidation within the Iraqi banking sector. The circular is issued pursuant to a decision of the CBI Board of Directors for the year 2024, and refers to updated Merger and Consolidation regulations attached to the circular, which are to be applied in accordance with the approved regulatory framework. These regulations form part of the CBI’s supervisory mandate to: Ensure the soundness and stability of the banking sector Regulate structural changes such as bank mergers and unions Maintain effective prudential oversight Align banking practices with applicable regulatory and governance standards All licensed banks are required to take note of the updated regulations and ensure compliance with the procedural and regulatory requirements set out therein. Bank mergers and consolidation transactions have a direct impact on: Financial stability Capital adequacy and governance structures Shareholder and depositor protection Regulatory supervision and approval processes 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.
New Instructions on POS Services and Merchant Fees
Central Bank of Iraq Issues Guidance on High-Risk Countries and FATF Listings The Central Bank of Iraq (CBI), through its Payment Systems Monitoring Department – Electronic Payment Division, has issued official instructions addressed to licensed banks and electronic payment service providers regarding the regulation and expansion of Point of Sale (POS) services in Iraq. The circular aligns with the CBI’s strategy to increase POS deployment, reduce reliance on cash transactions, and promote financial inclusion and electronic payments across the Iraqi market. Key Regulatory Measures Reduction of Merchant Discount Rate (MDR):The merchant commission has been reduced to 1% instead of 2%, as previously applied. This reduction applies for a two-year period, after which the rate may be reviewed based on market needs and service quality. Settlement Mechanism:POS transactions must be settled in Iraqi dinars through designated bank accounts opened for merchants for the purpose of receiving POS transaction proceeds. Prepaid Card Issuance:Merchants may be issued Iraqi dinar prepaid cards with a ceiling of IQD 13,000,000, provided that total monthly transactions do not exceed IQD 30,000,000. Scope of Eligible Merchants:POS services are intended for commercial activities, including retailers, service providers, professionals, craftsmen, workshops, transportation operators, and similar income-generating activities. Banks and payment service providers are required to: Provide dedicated support services to merchants using POS devices Offer technical assistance, hotlines, and operational follow-up Monitor merchant performance and encourage continued POS usage Promote POS adoption through incentives or loyalty mechanisms, where applicable Why This Circular Matters Expand cashless payment infrastructure Reduce operational costs for merchants Support small and medium businesses Enhance transparency and traceability of financial transactions Strengthen regulatory oversight of electronic payment services Financial institutions and payment providers must ensure that their commercial arrangements, settlement processes, and merchant onboarding procedures are aligned with this circular. 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.
High-Risk Countries and FATF Listings
Central Bank of Iraq Issues Guidance on High-Risk Countries and FATF Listings The Central Bank of Iraq (CBI), through its Anti-Money Laundering and Counter-Terrorist Financing Office, has issued an official guidance note addressing high-risk countries and clarifying the regulatory implications of a country’s inclusion on the Financial Action Task Force (FATF) lists. This guidance aims to enhance awareness among banks, financial institutions, and designated non-financial businesses and professions (DNFBPs) regarding risk-based compliance obligations when dealing with jurisdictions classified as high risk or subject to FATF monitoring. Key Points of the CBI Guidance Defines the concept of high-risk countries from an AML/CFT perspective Explains the difference between FATF high-risk jurisdictions and jurisdictions under increased monitoring Highlights the regulatory and compliance consequences of engaging with listed countries Emphasizes the need for enhanced due diligence (EDD) measures Reinforces alignment with international AML/CFT standards Regulatory Impact on Financial Institutions Entities operating in Iraq are required to: Apply enhanced customer due diligence when transactions involve high-risk jurisdictions Increase monitoring, reporting, and documentation controls Review internal risk assessment models and compliance frameworks Ensure alignment with CBI instructions and FATF recommendations Failure to adequately address risks related to high-risk countries may expose institutions to regulatory action, reputational risk, and operational disruption. Why This Guidance Matters This issuance reflects the CBI’s continued commitment to: Strengthen Iraq’s AML/CFT framework Protect the integrity of the financial and banking system Support compliance with international financial governance standards Reduce exposure to cross-border financial crime risks 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.
Central Bank of Iraq Regulates Mobile Electronic Payment Services for Small Traders
Central Bank of Iraq Regulates Mobile Electronic Payment Services for Small Traders The Central Bank of Iraq (CBI) has issued official instructions regulating mobile electronic payment services provided to small traders and micro-projects, as part of its ongoing efforts to enhance financial inclusion, transparency, and regulatory oversight in Iraq. Under the issued directive by the Payment Systems Monitoring Department – Electronic Payment Division, licensed electronic payment service providers are now permitted to open and manage electronic wallets for small traders, subject to specific financial and compliance controls. Key Regulatory Highlights Maximum wallet balance: IQD 3,000,000 (three million Iraqi dinars) Monthly transaction ceiling: IQD 10,000,000 (ten million Iraqi dinars) Monthly cash withdrawal limit: IQD 10,000,000 Wallet registration must be completed in person through authorized agent networks. Compliance & KYC Requirements Electronic payment providers are required to fully comply with Know Your Customer (KYC) procedures, including: Verify the trader’s identity and activity nature Assess the type of business and source of income Conduct on-ground visits to confirm business continuity Ensure wallet usage aligns with the declared commercial activity Maintain an approved registry of small traders, shared with the relevant bank These measures aim to mitigate financial misuse risks, strengthen anti-money laundering controls, and support the safe expansion of digital payment services across Iraq. Why This Matters? This regulatory development represents a significant step toward: Support small businesses and entrepreneurs Expand cashless payment adoption Strengthen financial governance and compliance Aligne Iraq’s payment ecosystem with international standards Businesses, payment service providers, and fintech operators must ensure their internal policies, KYC frameworks, and operational procedures are fully aligned with these requirements. 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.
Electronic Due Diligence Procedures for Foreign Companies
Electronic Due Diligence Procedures for Foreign Companies Pursuant to the Prime Minister’s Office letter No. (24456/3/63) dated 17 December 2024, Iraq has formalized an electronic correspondence mechanism for conducting due diligence on Arab and foreign companies through Iraqi embassies, commercial attachés, and diplomatic missions abroad. Key points include: Due diligence requests must be completed within a maximum of seven (7) days. Requests are to be submitted by government contracting entities to the Ministry of Planning via the official email: inv.contracts@mop.gov.iq. The request must be supported by an official signed letter from the Head of the Contracting Authority (or an authorized representative). Submissions must include the company name and full address in Arabic and English, along with trade name (if applicable). The prescribed due diligence form must be fully completed and supported by all required documents. The request must clearly specify the type and scope of information required, in line with the due diligence controls set out in Paragraph (Second). This development enhances transparency, accelerates verification procedures, and strengthens governance in government contracting processes in Iraq. 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.
Financing – Sovereign Guarantee
Financing – Sovereign Guarantee Etihad Law Firm is proud to be actively involved in supporting national efforts aimed at enhancing the confidence of international financial institutions in Iraq to enabling the industrial and investment sectors to access sustainable foreign #financing sources that meet economic development aspirations. The firm played a key role in preparing and drafting legal documents and commitments that govern the relationship between the Trade Bank of Iraq (TBI), Export Credit Agencies #ECAs, foreign banks, and international investors. This ensures clarity of obligations and integration of legal and financing frameworks in accordance with international standards. The firm’s team also cooperated with specialized international law firms to prepare contractual structures and provide the necessary legal advice to meet financing requirements, facilitating negotiations and coordination between all relevant parties, including industrial projects with a direct economic impact in Iraq. We are pleased to congratulate our #investor_clients who received yesterday’s Cabinet decision approving a #sovereign_guarantee. These are the first three Iraqi private sector projects to be financed in this manner, in cooperation with the #UK_Export_Credit_Agency #UKEF, Standard Chartered Bank. This achievement marks a significant turning point in the path of #Iraqi private sector #financing. Etihad expresses its high appreciation for the fruitful cooperation and significant facilitation provided by the Iraqi government, represented by the #Council_of_Ministers, the Ministry of Finance, and the Trade Bank of Iraq, in supporting this pioneering national effort. Etihad affirms its continued commitment to continuing to support national projects and foreign investments by providing comprehensive legal solutions that enhance the confidence of international partners in the Iraqi economy and contribute to achieving sustainable development.
Centeral Bank of Iraq
Centeral Bank of Iraq Centeral Bank of #Iraq has issued its Decision 155/2025 to ratify the updated Environmental, Social, and Governance (#ESG) Standards Guide, aligning our policies with global best practices. This critical update will: Mitigate Climate Risk: Introduce frameworks to identify and reduce exposures related to climate change. Enhance Corporate Governance: Clarify oversight roles for the Board and executive management. Protect Stakeholders: Safeguard depositors, shareholders, and community interests through robust ESG controls. Drive Sustainable Finance: Embed internationally recognized ESG metrics across all banking operations.
Sovereign Guarantee
Sovereign Guarantee Etihad Law Firm is pleased to announce the release of its latest publication: “#Sovereign_Guarantee Guide in #Iraq”. This comprehensive guide offers an in-depth overview of the sovereign guarantee mechanism and its pivotal role in stimulating #investment and supporting major #projects in a rapidly evolving market. Prepared by Mr. Ahmed Al Hankawi and Ms. Shayma Azeez Hatem; the guide presents a clear and concise summary of the essential information, enriched with legal insights and practical perspectives. Amid Iraq’s ongoing economic transformation, in light of government led initiatives and regulatory reforms aimed at attracting foreign capital; the sovereign guarantee emerges as a key instrument for enhancing investor confidence and #mitigating risk. It opens up promising opportunities across sectors such as #infrastructure, #industry, #agriculture, and more. This guide serves as a valuable reference for investors and decision makers seeking to understand the legal and institutional framework of sovereign guarantees in Iraq and to explore the vast potential offered by the country’s dynamic economic landscape.
Merchant Onboarding & Know-Your-Business (KYB) Requirements
Merchant Onboarding & Know-Your-Business Requirements Merchant onboarding is a critical function for EPSPs that operate payment acceptance services, POS terminals, or payment gateway solutions. To prevent misuse of digital payment channels, EPSPs must conduct due diligence on merchants through Know-Your-Business (KYB) checks. These checks verify that merchants are legitimate, licensed, and engaged in lawful activities. Merchant Onboarding Requirements Collection of business registration documents Verification of licensing and commercial activities Risk classification of merchant industry Assessment of transaction patterns and expected volumes Beneficial ownership identification Operational Controls Chargeback and refund procedures Pricing transparency and fee disclosures Merchant reporting dashboards Settlement scheduling and bank account verification CBI compliance Conduct KYB in accordance with AML/CFT guidelines Monitor merchant transactions for unusual behavior Report suspicious merchant activity where applicable Maintain merchant files for audit and supervisory review 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.
ESG Standards Guidance for 2025
ESG Standards Guidance for 2025 The shift toward Environmental, Social, and Governance (ESG) criteria is influencing banking regulation, risk assessment, and financing decisions. The CBI and international institutions are promoting ESG integration to improve governance, transparency, and sustainable financing practices within the financial sector. Banks that adopt ESG frameworks strengthen credibility with investors, lenders, and regulators. ESG components applied in bank: Environmental: energy use, emissions, climate risks Social: customer protection, labor practices, financial inclusion Governance: board oversight, compliance, transparency CBI and supervisory expectations may include: ESG reporting standards Integration of ESG into risk management Disclosure of sustainability metrics 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.