Iraq Requires Health Ministry Approval Before Registering Medical Companies

Iraq Requires Health Ministry Approval Before Registering Medical Companies The Registrar of Companies has announced that any company intending to conduct medical, pharmaceutical, or healthcare activities in Iraq must obtain prior written approval from the Ministry of Health’s Technical Affairs Department Pharmacy Division before submitting a registration application. Medical and healthcare companies cannot register without a Ministry of Health pre-approval letter. Registrations submitted without this document will be invalidated. WHAT COMPANIES MUST DO Approval must be obtained from the Medical Supplies Branch of the Pharmacy Division. The requirement applies to pharmaceutical, clinical, and health-supply businesses. Failure to obtain prior approval renders the company registration void. The circular was issued directly by the Director General of the Companies Registry.

Iraqi Banks Must Record Founder Name in Capital Deposit Documents

Iraqi Banks Must Record Founder Name in Capital Deposit Documents The Registrar of Companies has announced a new Anti-Money Laundering measure requiring all Iraqi banks to record the founding shareholder’s name in both the capital deposit slip and the bank account statement at the point of company formation. Banks must now link the founder’s identity to the capital deposit record. This applies to all new company formations and directly affects the incorporation process. WHAT COMPANIES MUST DO Both the deposit voucher and bank statement must carry the founder’s name alongside the company name. The requirement applies from the moment of company formation. The measure supports Iraq’s compliance with international AML frameworks. Banks failing to implement this requirement face regulatory consequences.

Anti-Trafficking Policy for All Labor Recruitment Companies

Anti-Trafficking Policy for All Labor Recruitment Companies The Registrar of Companies has announced, as part of Iraq’s 2026 Annual Anti-Human Trafficking Plan, that all licensed manpower and labor recruitment companies must file a formal corporate social responsibility statement containing explicit anti-trafficking commitments. All recruitment companies must submit an annual anti-trafficking policy to the Companies Registry. Failure to comply risks suspension of the recruitment license. WHAT COMPANIES MUST DO Policies must address worker rights guarantees, supply chain monitoring, and non-involvement in exploitative practices. Submissions are mandatory and must be renewed annually with the Directorate. The requirement follows the Directorate’s circular dated 9 April 2025. Non-compliant companies face license suspension.

New Accountant Signature Model Requirement

New Accountant Signature Model Requirement The Registrar of Companies has announced that all limited companies are now required to submit the name and specimen signature of the accountant responsible for preparing their financial statements, as part of measures to combat fraudulent financial reporting. Companies must provide an accountant specimen signature to the registry. The signature will be cross-referenced against all submitted accounts to verify authenticity. WHAT COMPANIES MUST DO The accountant’s name and specimen signature must be filed with the Companies Registry. Signatures will be verified against all future account submissions. Companies that previously submitted accounts with endorsement letters must also comply. The measure directly targets falsified financial reporting.

Iraq Requires Auditor Union Membership for Final Account Acceptance

Iraq Requires Auditor Union Membership for Final Account Acceptance The Registrar of Companies has announced, based on Federal Court of Cassation ruling No. 323/297 and the Auditing and Accounting Profession Council directive, that final accounts will only be accepted when the submitting auditor presents a valid Association membership card. All company final accounts must be accompanied by the auditor’s union membership verification. Submissions without this documentation will be rejected at the registry. WHAT COMPANIES MUST DO Final accounts must bear the endorsement of the Auditing and Accounting Profession Council. Presenting the auditor’s union membership card is now a mandatory submission requirement. The rule applies to all companies regardless of size or sector. Non-compliant submissions face automatic rejection.

Supply Chain Finance in Iraq

Supply Chain Finance in Iraq Supply chain finance (SCF) encompassing a range of financial instruments and techniques that optimise cash flow across supply chains is an area of growing importance in Iraq’s evolving financial sector. From reverse factoring programmes that allow suppliers to receive early payment on approved invoices, to receivables financing that converts trade receivables into immediate cash, SCF techniques address the working capital challenges faced by businesses throughout Iraq’s commercial ecosystem. As the CBI develops its fintech and payment system infrastructure, the regulatory framework for SCF in Iraq is evolving. This article examines the legal and regulatory considerations for supply chain finance in Iraq. What is Supply Chain Finance? Supply chain finance refers to a set of technology-based solutions and financing techniques that link buyers, sellers, and financing institutions along a supply chain to optimise working capital. The principal SCF techniques include: reverse factoring (approved payables financing), a buyer-led programme in which the buyer’s bank or a specialised financier pays the supplier early at a discounted rate, in exchange for the buyer’s confirmed payment obligation; factoring the supplier sells its receivables to a factor (a bank or specialist financier) in exchange for immediate cash, with the factor collecting payment from the buyers; invoice discounting the supplier raises finance against its outstanding invoices while retaining responsibility for collection; and dynamic discounting, a buyer-funded programme in which the buyer pays suppliers early in exchange for a discount, funded from the buyer’s own cash resources. The Iraqi Legal Framework for Receivables Financing The legal framework for receivables financing in Iraq draws primarily on the Iraqi Civil Code’s provisions on assignment of rights. Under Articles 347 to 358 of the Civil Code, a creditor (assignor) may assign its rights against a debtor (obligor) to a third party (assignee), subject to notification of the debtor. For supply chain finance purposes, this means a supplier may assign its right to payment under a commercial contract to a bank or financier, subject to: the assigned rights being assignable under the underlying contract, many contracts contain anti-assignment provisions that must be checked; the debtor (buyer) being notified of the assignment; and the assignment not being contrary to Iraqi public policy. The Iraqi legal framework does not yet include modern receivables financing legislation equivalent to UNCITRAL’s Convention on the Assignment of Receivables. CBI Electronic Payment and Fintech Framework The CBI has been developing its regulatory framework for electronic payments and fintech, a development with significant implications for supply chain finance platforms that require electronic invoice confirmation, payment processing, and financing mechanisms. CBI instructions on electronic payment services and payment system oversight are evolving and companies developing SCF platforms in Iraq should monitor regulatory developments carefully. The CBI’s strategic plan for financial sector development includes goals for expanding digital financial services, a supportive backdrop for SCF product development. AML Considerations in Supply Chain Finance Supply chain finance transactions particularly invoice financing and factoring carry specific AML risks that Iraqi banks and financiers must manage. Key AML risks in SCF include: invoice fraud fictitious or inflated invoices used to obtain financing for non-existent goods or services; duplicate financing the same invoice presented to multiple financiers simultaneously; and supply chain manipulation misrepresentation of the buyer-supplier relationship to obtain more favourable financing terms. AML Law No. 39 of 2015 and CBI AML instructions require banks providing SCF products to implement appropriate transaction monitoring and due diligence on both buyers and suppliers in SCF programmes. Structuring SCF Programmes for Iraqi Companies Companies seeking to establish supply chain finance programmes in Iraq should address the following legal and operational considerations: assignment validity ensuring that the underlying supply contracts permit assignment of payment rights to the financing institution; debtor notification establishing a clear mechanism for notifying debtors of assignments, which is required under Iraqi civil law for an effective assignment; confirmation process establishing a mechanism for buyers to confirm invoice amounts and payment obligations as the basis for supplier financing; and dispute resolution addressing the treatment of invoices subject to commercial dispute between buyer and supplier, including whether disputed invoices are excluded from the SCF programme. International Standards and Iraqi SCF The Global Supply Chain Finance Forum (GSCFF) has published standard definitions and market practice guidelines for SCF techniques that are increasingly adopted by banks and corporates internationally. Iraqi banks developing SCF products should refer to GSCFF standards to ensure their programmes meet international market practice. The ICC has also published guidance on supply chain finance in the trade finance context. As Iraq’s SCF market develops, alignment with international standards will be important for attracting international bank participation in domestic SCF programmes. How Etihad Law Firm Assists Etihad advises Iraqi banks and corporate clients on the legal structuring of supply chain finance programmes, reviews the legal basis for receivables assignment under Iraqi law, advises on CBI regulatory requirements for SCF products, and assists in drafting SCF documentation including master receivables purchase agreements and programme documentation.

Islamic Trade Finance in Iraq

Islamic Trade Finance in Iraq Islamic finance has grown significantly in Iraq since the enactment of Islamic Banking Law No. 43 of 2015, which provided the legal foundation for Sharia-compliant banking. In the trade finance context, Islamic structures offer alternatives to conventional letters of credit and documentary collections that are compliant with the prohibition on riba (interest) a requirement that is of fundamental importance to a significant portion of Iraq’s business community and banking sector. This article examines the legal structures used in Islamic trade finance in Iraq, the regulatory framework under Islamic Banking Law No. 43, and how AAOIFI standards shape Islamic trade finance practice. The Legal Foundation — Islamic Banking Law No. 43 of 2015 Islamic Banking Law No. 43 of 2015 established the comprehensive legal framework for Islamic banking in Iraq. The law: defines Islamic banking as banking activity conducted in accordance with Islamic Sharia principles that prohibit riba, gharar (excessive uncertainty), and maysir (speculation); authorises the CBI to license banks to conduct Islamic banking either as dedicated Islamic banks or through Islamic banking windows within conventional banks; requires Islamic banks to establish a Sharia Supervisory Board composed of qualified Islamic scholars to oversee Sharia compliance; and empowers the CBI to issue instructions governing Islamic banking operations. The CBI has issued implementing instructions under Islamic Banking Law No. 43 covering licensing, capital adequacy, liquidity management, and product governance for Islamic banks. Key Islamic Trade Finance Structures The primary Islamic trade finance structures used by Iraqi banks include: Murabaha, a cost-plus sale arrangement where the bank purchases goods from the supplier and resells them to the customer at a marked-up price, with deferred payment. The bank’s profit is the mark-up rather than interest. Murabaha is the most widely used Islamic trade finance structure globally and in Iraq. Wakala, an agency arrangement where the bank acts as agent for the customer in purchasing goods, receiving a fixed agency fee rather than interest. Murabaha bi-l-wakala, a hybrid structure where the bank appoints the customer as its agent to purchase goods on its behalf, then sells the goods to the customer on a murabaha basis. This hybrid is widely used in trade finance due to its operational flexibility. Salam, a forward sale contract where the bank pays the full price in advance for goods to be delivered at a future date; used in agricultural finance. Islamic Letters of Credit Islamic banks in Iraq issue letters of credit that are structured to comply with Sharia principles. An Islamic letter of credit operates similarly to a conventional LC in its trade finance function providing payment assurance to the exporter but the underlying financing arrangement between the bank and the importer is structured as a murabaha rather than a conventional loan with interest. The bank opens the LC using its own funds, pays the exporter upon compliant document presentation, and then sells the goods to the importer on deferred murabaha terms recovering its cost plus a profit margin over the agreed payment period. AAOIFI Sharia Standard No. 14 provides guidance on the Sharia requirements for letters of credit. AAOIFI Standards in Iraqi Islamic Banking The Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) publishes Sharia standards that are widely adopted by Islamic financial institutions globally. In Iraq, Islamic banks are expected to align with AAOIFI standards as part of their Sharia compliance obligations under Islamic Banking Law No. 43 and CBI instructions. Key AAOIFI standards relevant to Islamic trade finance include: Standard No. 1 (Trading in Currencies) governing foreign exchange transactions; Standard No. 8 (Murabaha) governing murabaha transactions; Standard No. 10 (Salam and Parallel Salam); Standard No. 14 (Documentary Credits) governing Islamic letters of credit; and Standard No. 27 (Investment Agencies/Wakala). The Sharia Supervisory Board Every Islamic bank in Iraq is required by Islamic Banking Law No. 43 to maintain a Sharia Supervisory Board composed of qualified Islamic scholars. The Sharia Supervisory Board’s role in the trade finance context includes: reviewing and approving new Islamic trade finance products before launch; issuing fatwa (Sharia opinions) on the permissibility of specific transactions or structures; reviewing bank operations periodically to ensure ongoing Sharia compliance; and issuing annual Sharia compliance reports. For trade finance transactions, the Sharia Supervisory Board’s approval of the relevant product structure (e.g. murabaha LC) is essential for the transaction to be considered Sharia-compliant. Practical Differences from Conventional Trade Finance Islamic trade finance in Iraq differs from conventional trade finance in several practical respects: documentation is more complex Islamic trade finance transactions require Sharia-specific documents including offer and acceptance forms, murabaha agreements, and Sharia board approvals; the bank must actually purchase the goods in a Murabaha, the bank’s ownership of the goods, even briefly, is a Sharia requirement that must be documented; the profit rate is fixed at inception unlike conventional interest rates that may be floating, murabaha profit is fixed and cannot be increased if the customer is late in payment; and late payment charges require Sharia approval conventional late payment interest is not Sharia-compliant; AAOIFI standards permit charitable late payment arrangements as an alternative. How Etihad Law Firm Assists Etihad advises Islamic banks and corporate clients on Islamic trade finance structuring and documentation compliant with Islamic Banking Law No. 43, CBI instructions, and AAOIFI standards. We assist in drafting murabaha agreements, wakala arrangements, and Islamic LC documentation, and advise on Sharia compliance issues arising in complex trade transactions.

Documentary Collections in Iraq

Documentary Collections in Iraq Documentary collections also known as bills for collection represent a simpler and less expensive alternative to letters of credit for financing international trade. Under a documentary collection, the exporter’s bank forwards shipping and commercial documents to the buyer’s bank (the collecting bank) with instructions to release the documents to the buyer only upon payment (documents against payment, D/P) or upon the buyer’s acceptance of a bill of exchange (documents against acceptance, D/A). In Iraq, documentary collections are used alongside letters of credit, particularly for transactions between established trading partners where full LC security is not required. This article examines the URC 522 framework governing documentary collections and its application in Iraqi banking practice. What is a Documentary Collection? A documentary collection is a method of trade payment in which the exporter (principal) instructs its bank (remitting bank) to forward shipping documents typically including the bill of lading, commercial invoice, packing list, and certificate of origin to the importer’s bank (collecting bank) with instructions to deliver the documents to the importer (drawee) only upon specified conditions being met. Unlike a letter of credit, the bank does not undertake to pay, it acts only as an agent, collecting payment from the importer and remitting it to the exporter. This makes collections less secure than LCs for exporters but simpler and less expensive to administer. URC 522 — The Governing Rules Documentary collections are governed by the Uniform Rules for Collections (URC 522), published by the ICC in 1995. URC 522 provides the framework of rights and obligations for principals, remitting banks, collecting banks, and presenting banks in collection transactions. Key URC 522 provisions include: the bank’s role as agent banks act only on the instructions in the collection order and have no obligation to ensure payment; the distinction between clean collections (financial documents only e.g. cheques) and documentary collections (commercial documents with or without financial documents); the time for payment in D/P terms, documents are released only against payment; in D/A terms, documents are released against acceptance of a bill of exchange; and the bank’s duty to notify promptly of non-payment or non-acceptance. Documents Against Payment (D/P) Collections in Iraq In a D/P collection, the Iraqi collecting bank releases the shipping documents to the importer only upon the importer making full payment to the collecting bank. The collecting bank remits the collected funds to the remitting bank, which credits the exporter. Key considerations for D/P collections in Iraqi practice include: the importer must have access to foreign currency in Iraq, this typically requires access to USD through the CBI currency window; the CBI’s foreign exchange regulations apply to D/P collection payments as they do to LC payments; and the collecting bank has no obligation to advance funds if the importer cannot pay, documents are retained and the exporter must arrange for their return or disposal. D/P collections are more secure for exporters than D/A terms but less secure than LCs, the importer can simply refuse to pay and the exporter loses the goods if already shipped. Documents Against Acceptance (D/A) Collections in Iraq In a D/A collection, the Iraqi collecting bank releases documents to the importer upon the importer accepting a bill of exchange (drawn by the exporter on the importer), a formal promise to pay at a future date. The accepted bill of exchange becomes a negotiable instrument representing the importer’s payment obligation. D/A collections carry higher risk for exporters: once documents are released against acceptance, the exporter has parted with the goods and relies only on the importer’s promise to pay on the bill’s due date. In Iraq, D/A collections involve additional credit risk given the commercial environment. Exporters using D/A terms with Iraqi importers should conduct thorough credit assessment and consider credit insurance. CBI Requirements for Collections CBI requirements applicable to documentary collections in Iraq include: Iraqi banks handling collections must comply with applicable CBI foreign exchange instructions for the remittance of collection payments; AML customer due diligence obligations apply to collection transactions,  Iraqi collecting banks must know their customers and understand the nature of the underlying trade transaction; and large collection transactions may attract reporting obligations under AML Law No. 39. Iraqi banks acting as collecting banks should ensure that their collection services comply with both URC 522 requirements and applicable CBI instructions. Collections vs Letters of Credit — When to Use Each The choice between documentary collections and letters of credit in Iraqi trade transactions depends on: the relationship between buyer and seller collections are more appropriate for established trading relationships where the exporter is confident in the importer’s creditworthiness and willingness to pay; the risk tolerance of the exporter. LCs provide stronger payment protection but are more expensive and complex; the value and nature of the goods high-value goods with limited alternative buyers if not collected justify the additional cost of an LC; and the commercial terms, buyers in competitive markets may resist LC requirements, preferring the less burdensome collection mechanism. How Etihad Law Firm Assists Etihad advises exporters and importers on the use of documentary collections in Iraqi trade transactions, reviews collection instructions and bank documentation for URC 522 compliance, advises on disputes arising from non-payment or non-acceptance under collections, and advises on the choice between collections and LCs for specific transactions.

KYC and Customer Due Diligence in Iraqi Banking

KYC and Customer Due Diligence in Iraqi Banking Know Your Customer (KYC) and Customer Due Diligence (CDD) are the foundational elements of any effective AML compliance programme. For Iraqi banks, implementing robust KYC and CDD processes is both a legal requirement under AML Law No. 39 of 2015 and CBI instructions, and a commercial necessity for maintaining the correspondent banking relationships that underpin international operations. This article provides a comprehensive guide to KYC and CDD requirements for Iraqi banks, examining the regulatory framework, key compliance elements, and best practices for building an effective programme. The Regulatory Framework for KYC in Iraq KYC requirements in Iraq are primarily governed by: AML Law No. 39 of 2015 which establishes the mandatory CDD obligations for financial institutions, including banks, exchange houses, and insurance companies; CBI AML instructions which provide detailed operational guidance on how banks must implement their CDD obligations; and FATF Recommendation 10 which sets the international standard for CDD that Iraqi banks are expected to meet as part of Iraq’s FATF commitments. The AMLCFT Office supervises compliance with AML Law No. 39 obligations, while the CBI supervises the implementation of its instructions by licensed banks through on-site and off-site examination. Customer Identification — The First Step Customer identification is the process of collecting information about a customer before establishing a business relationship or conducting a transaction. For individual customers, Iraqi banks must collect and verify: full name; date and place of birth; nationality; national identification number or passport number; residential address; and profession or business activity. For corporate customers, banks must collect: legal name and trading name; registered address and principal place of business; date and jurisdiction of incorporation; company registration number; nature of business; names of directors and authorised signatories; and beneficial ownership information. All identification information must be verified against reliable, independent source documents. Risk-Based Approach to CDD FATF recommendations and CBI instructions require Iraqi banks to apply a risk-based approach to CDD calibrating the intensity of due diligence to the money laundering risk posed by the specific customer, product, and transaction. The risk-based approach involves: risk assessment categorising customers into risk tiers (low, medium, high) based on factors including country of origin, business type, product used, and transaction patterns; simplified due diligence for low-risk customers and products, reduced documentation and monitoring requirements may apply; standard due diligence, the baseline level of CDD applied to typical customers; and enhanced due diligence more intensive due diligence applied to high-risk customers, including PEPs, non-resident customers, high-risk jurisdictions, and complex corporate structures. Enhanced Due Diligence — High Risk Customers Enhanced due diligence (EDD) is required for certain categories of higher-risk customers. Under CBI AML instructions and FATF recommendations, EDD must be applied to: politically exposed persons (PEPs) including their family members and close associates; customers from countries with high money laundering risk as assessed by FATF, the Basel AML Index, or the bank’s own risk assessment; customers with complex beneficial ownership structures including multiple layers of holding companies or trust arrangements; high-risk business activities including businesses dealing in cash, precious metals, real estate, or other sectors with elevated money laundering risk; and non-face-to-face customers including online and remote customers where identity verification is more challenging. Ongoing Monitoring — KYC is Not a One-Time Exercise CDD is not a one-time exercise conducted when the customer relationship is established, it is an ongoing obligation. CBI AML instructions require Iraqi banks to: conduct periodic reviews of existing customer relationships the frequency depending on the customer’s risk profile; update customer information when material changes occur such as changes in beneficial ownership, business activities, or risk profile; monitor transactions on an ongoing basis to identify patterns inconsistent with the customer’s known risk profile and business activities; and re-verify customer identification where doubts arise about the accuracy or currency of previously obtained information. Failure to conduct ongoing monitoring means that changes in customer risk profile including designations under sanctions regimes may not be detected. Building a Compliant KYC Programme An effective KYC programme for an Iraqi bank should include: a comprehensive written KYC policy approved by the board of directors; a risk assessment methodology for customer risk rating; documented procedures for customer identification, verification, and ongoing monitoring; technology systems capable of supporting KYC processes at scale including automated screening and case management; a team of trained compliance officers responsible for KYC reviews; quality assurance processes to ensure KYC standards are consistently applied; and independent internal and external audit of the KYC programme. The programme must be capable of demonstrating compliance to both the CBI and international correspondent banks. How Etihad Law Firm Assists Etihad advises Iraqi banks on KYC programme development and implementation, drafts KYC policies and procedures compliant with AML Law No. 39 and CBI instructions, advises on EDD for specific high-risk customer categories, and represents banks in CBI examinations and AMLCFT Office inquiries related to KYC compliance.

Correspondent Banking in Iraq

Correspondent Banking in Iraq: How Iraqi Banks Maintain International Access Access to correspondent banking relationships is the lifeblood of Iraqi banks’ international operations. Correspondent banks typically large international financial institutions in the US, Europe, and the Gulf provide Iraqi banks with access to the USD clearing system, trade finance capabilities, and connections to the global financial network. Without correspondent relationships, an Iraqi bank cannot process international payments, issue or receive letters of credit, or facilitate any cross-border transaction. Yet maintaining these relationships has become increasingly challenging as international banks apply ever-stricter AML and compliance standards. This article examines the requirements for maintaining correspondent banking relationships, the risk of de-risking, and what Iraqi banks must do to protect their international access. Why Correspondent Banking Access is Critical for Iraq Iraq’s economy depends fundamentally on international connectivity. Oil revenues the primary source of government income flow through international banking systems. Import finance for the goods Iraq needs food, medicine, construction materials, electronics requires USD correspondent banking access. International investment in Iraq requires banking infrastructure that connects to global capital markets. For Iraqi banks, correspondent relationships are therefore not merely a commercial convenience but an existential requirement. The loss of a major USD correspondent particularly a US bank providing access to the Federal Reserve’s payment system can significantly impair an Iraqi bank’s ability to serve its clients. The Wolfsberg Group Principles The Wolfsberg Group is an association of thirteen global banks that publishes voluntary principles for financial crime compliance. The Wolfsberg Correspondent Banking Principles are the primary reference document used by international banks to assess potential respondent bank relationships. These principles require international banks to conduct due diligence on respondent banks including: assessing the respondent bank’s AML programme, including its CDD, transaction monitoring, and STR filing practices; evaluating the respondent bank’s regulatory status and its relationship with its home country regulator; assessing the respondent bank’s ownership structure and beneficial ownership transparency; and conducting ongoing monitoring of the respondent relationship. Iraqi banks seeking or maintaining correspondent relationships must be prepared to respond comprehensively to due diligence questionnaires based on Wolfsberg standards. SWIFT KYC Registry The SWIFT KYC Registry is a centralised platform for banks to share and access standardised KYC information about their correspondent banking counterparties. All SWIFT-connected banks including Iraqi banks are expected to maintain complete and current profiles in the SWIFT KYC Registry. The Registry contains: ownership structure information; AML programme documentation; regulatory status and examination history; and financial information. International correspondents use SWIFT KYC Registry profiles as the starting point for their due diligence on Iraqi respondent banks. An incomplete or outdated SWIFT KYC Registry profile is a red flag that can cause correspondent banks to downgrade or terminate relationships. CBI Requirements for Correspondent Banking The CBI requires Iraqi banks to apply correspondent banking due diligence standards to their own correspondent relationships, in accordance with AML Law No. 39 of 2015 and CBI AML instructions. Iraqi banks acting as respondents must provide accurate and comprehensive information to their correspondents on request. Iraqi banks that also maintain their own correspondent relationships with smaller Iraqi or regional banks must apply Wolfsberg-equivalent due diligence to those relationships assessing the AML programmes, regulatory status, and risk profiles of their own correspondents. De-Risking — The Existential Threat De-risking refers to the practice of international banks terminating correspondent relationships with respondent banks that are considered too risky to comply. For Iraqi banks, de-risking is a significant and growing threat. International banks citing concerns about Iraq’s grey list status, AML compliance quality, and sanctions risk have terminated or restricted correspondent relationships with Iraqi institutions. The consequences of de-risking for an Iraqi bank include: inability to process international payments; loss of trade finance capabilities; reduction in available foreign currency; and ultimately, competitive disadvantage relative to banks that have maintained their correspondent access. Preventing de-risking requires Iraqi banks to invest substantially in compliance infrastructure. How Iraqi Banks Can Maintain Correspondent Relationships Iraqi banks can take the following steps to maintain and strengthen their correspondent banking relationships: invest in AML compliance infrastructure automated screening systems, experienced compliance staff, and board-level governance of compliance; complete and regularly update SWIFT KYC Registry profiles; respond promptly and comprehensively to correspondent due diligence requests; maintain transparent communication with correspondents about any regulatory matters or enforcement actions; demonstrate improvement in AML metrics including STR filing rates and training completion; engage proactively with correspondents rather than waiting for them to raise concerns; and consider engaging independent AML advisers to conduct gap analyses and certification of compliance programme quality. How Etihad Law Firm Assists Etihad advises Iraqi banks on correspondent banking compliance, assists in preparing responses to correspondent due diligence requests, advises on Wolfsberg Principles compliance, and represents banks in regulatory matters affecting their correspondent relationships. We also advise international banks on AML due diligence for Iraqi correspondent relationships.