Outsourcing & Third-Party Service Provider Requirements

Outsource & Third-Party Service Provider Requirements EPSPs frequently rely on third-party providers for technology infrastructure, cloud hosting, cybersecurity tools, POS hardware, payment gateways, and customer support. Outsourcing arrangements introduce risk if not properly managed, which is why the Central Bank of Iraq requires providers to maintain control over outsourced functions and ensure supervisory access. Outsourcing risk management is a core regulatory expectation for electronic payment providers in Iraq. Outsource Categories Technology infrastructure and cloud services Software development and maintenance Card processing and switching systems Call center and customer support functions Operational Requirements Written outsourcing agreements Data confidentiality and privacy protections Termination and exit planning Performance and uptime SLAs Audit and access rights for regulators CBI compliance Notify or seek approval for material outsourcing arrangements Ensure outsourced functions meet CBI technical standards Maintain accountability for compliance and risk Ensure no outsourcing impairs supervision or operations 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.  

Capital and Ownership Requirements for EPSPs in Iraq

Capital and Ownership Requirements for EPSPs in Iraq Electronic Payment Service Providers (EPSPs) must meet capital and ownership requirements imposed by the Central Bank of Iraq to ensure financial strength, transparency, and sustainable operations. These requirements protect the integrity of the payment ecosystem and ensure that only qualified and suitable investors can control regulated entities. Both domestic and foreign applicants must demonstrate financial capacity, proper governance, and lawful sources of funds before obtaining a license. Capital Requirements Minimum paid-up capital thresholds set by the CBI. Capital must be contributed in cash and from legitimate sources. Adequate capital must be maintained throughout operations not only at licensing. Additional capital buffers may be required for expansion of activities. Ownership & Shareholder Requirements Shareholders and ultimate beneficial owners must be disclosed. Controlling shareholders undergo suitability (fit & proper) assessment. Foreign ownership may be permitted subject to regulatory review. Transfers of ownership or changes in control require prior approval. Source of Funds CBI will verify the legitimacy of investor funds. Documentation may include bank statements, financial records, and net worth statements. Corporate shareholders must provide audited financials and legal documentation. CBI compliance Maintain required capital levels on a continuous basis. Notify CBI of changes in ownership or capital structure. Seek approval for restructuring or capital increases. Ensure shareholder financial soundness and transparency. Comply with reporting and inspection 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.  

Foreign Investor Entry into the Iraqi EPSP Market

Foreign Investor Entry into the Iraqi EPSP Market Iraq’s electronic payment sector has attracted interest from foreign payment companies, fintechs, and technology firms. Foreign investors must navigate licensing, localization, data residency, ownership rules, and compliance requirements to operate legally. The market offers significant growth opportunities but requires structured market entry planning to align with CBI regulations and Iraqi operating conditions. Foreign Investor Considerations Licensing requirements and permitted activities Local incorporation vs. branch vs. joint venture structures Ownership approvals and capital requirements Local data hosting and IT infrastructure expectations Merchant network development Regulatory Compliance Requirements Engage with the CBI for licensing procedures Demonstrate technical adequacy and cybersecurity capacity Establish AML/KYC capabilities suitable for Iraq Maintain local governance and oversight mechanisms CBI compliance Transparency of ownership and control Financial soundness of parent company Source of funds verification Knowledge transfer and local capacity building 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.  

AML Reporting Requirements for Banks

AML Reporting Requirements for Banks Anti-Money Laundering (AML) reporting is a mandatory compliance function for banks operating in Iraq. The regulatory framework—shaped by the Central Bank of Iraq (CBI) and aligned with FATF international standards—requires banks to monitor, detect, and report suspicious financial activities. The system aims to mitigate risks associated with financial crime, terrorist financing, sanctions breaches, and illicit cross-border movements of funds. In practical terms, AML compliance is not only a regulatory obligation but a condition for maintaining correspondent banking relationships, international credibility, and access to foreign payment channels. Core AML reporting obligations: Suspicious Transaction Reports (STR) High-value cash or threshold transaction reporting Cross-border transfers (when applicable) Customer due diligence (initial & ongoing) Internal controls required within banks: Designated AML Compliance Officer Written AML/CFT policies and procedures Enhanced due diligence for high-risk cases Sanctions, PEP and watchlist screening Automated monitoring systems (if available) Mandatory staff training Audit and record retention requirements CBI compliance expectations Establish risk-based AML frameworks File reports in accordance with deadlines Provide records during regulatory audits Cooperate with supervisory inspections Maintain transaction data for prescribed retention periods Implement minimum technology and screening capabilities 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.  

Letters of Credit (LCs)

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.  

Future of Digital Payments in Iraq

Future of Digital Payments in Iraq Iraq’s digital payment market is in a growth phase with increasing adoption by consumers, merchants, and government institutions. Financial inclusion, smartphone penetration, and regulatory modernization are reshaping the payment landscape and attracting interest from regional and international players. Growth Drivers Include Digital government initiatives Merchant and retail adoption Mobile wallet usage Infrastructure and telecom expansion Banking interoperability improvements Emerging Opportunities Embedded finance and digital lending Buy-Now-Pay-Later (BNPL) models ESG-aligned financial services Open banking and APIs (future potential) Regulatory Direction Encourage digital payments Strengthen AML and IT controls Expand consumer protection frameworks 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.  

License Requirements for Telecom Operators and Service Providers

License Requirements for Telecom Operators and Service Providers Telecom operators and service providers must obtain licenses from the CMC before offering telecommunications services in Iraq. Licensing may apply to mobile operators, fixed-line operators, infrastructure providers, wholesale carriers, or specialized service providers. Licensing ensures service quality, network reliability, lawful use of spectrum, and compliance with national regulatory goals. License Categories Mobile network operator licenses Fixed-line and broadband licenses Infrastructure sharing and tower licenses Virtual network or resale licenses Carrier and wholesale licenses Requirements for Applicants Corporate registration and ownership disclosures Technical and network deployment plans Financial capacity and investment commitments Service coverage commitments Consumer protection procedures CMC Compliance Provide reliable and continuous service Comply with spectrum usage conditions Maintain infrastructure security and resilience Submit regulatory reports and audits Adhere to consumer protection and QoS standards 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.  

Overview of the Telecommunications & Media Regulatory Landscape in Iraq

Overview of the Telecommunications & Media Regulatory Landscape in Iraq The telecommunications and media sectors in Iraq are supervised by the Communications and Media Commission (CMC), which regulates licensing, spectrum usage, broadcasting content, digital platforms, and consumer protection. The sector includes mobile operators, internet service providers (ISPs), satellite broadcasters, television and radio companies, OTT platforms, and digital content providers. Regulatory focus has expanded to include cybersecurity, data protection, and infrastructure development as Iraq modernizes its digital ecosystem. Regulatory Components Licensing and registration of operators Spectrum management and allocation Network and infrastructure oversight Broadcasting and content regulation Consumer protection and service quality Compliance and enforcement measures 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.  

Dispute Resolution & Chargeback Procedures

Dispute Resolution & Chargeback Procedures Digital payments may involve transaction disputes due to processing errors, fraud, non-delivery of goods, or merchant issues. EPSPs and merchant acquirers must establish structured dispute resolution and chargeback procedures to safeguard consumers, protect merchants, and maintain market trust. Dispute handling is also a supervisory requirement under consumer protection mandates. Dispute Scenarios Unauthorized transactions Incorrect transaction amounts Non-delivery or defective goods/services Merchant refund disputes Processing or settlement errors Chargeback & Resolution Requirements Defined timelines for dispute submission and processing Documentation requirements for claim validity Notice mechanisms for merchants and customers Final resolution and remediation processes CBI compliance Maintain written dispute and chargeback policies Provide accessible customer support channels Report patterns of disputes and complaints Track resolution metrics for 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.  

Letters of Guarantee (LGs)

Letters of Guarantee (LGs) Letters of Guarantee are widely used instruments in Iraq’s commercial, construction, oil & gas, and government procurement markets. They enable project owners, government entities, and contracting companies to mitigate counterparty performance and payment risks. In practice, no major project in Iraq proceeds without LGs, and most tenders (especially public sector) explicitly mandate their submission as part of the bid or execution phase. For contractors or suppliers, securing an LG from their bank is a prerequisite to participate in tenders, obtain advance payments, or assure contractual performance. Common situations where LGs are required: Bid participation (Bid Bond) Project execution (Performance Bond) Advance payment protection Financial guarantee obligations Documentation typically 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 Assess commercial viability of the underlying contract Perform credit risk analysis on the applicant Secure adequate collateral or counter-indemnity Monitor exposure as off-balance sheet commitments Apply AML/CFT screening to prevent misuse 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.