How to Establish an Electronic Payment Company in Iraq

How to Establish a Bank in Iraq: Investor & Regulatory Guide Establishing an Electronic Payment Service Provider (EPSP) in Iraq is regulated by the Central Bank of Iraq (CBI) under the Electronic Payment Services Regulation and related CBI instructions. Any entity wishing to provide electronic wallets, POS services, payment processing, or digital payment solutions must obtain prior licensing and approval from the Central Bank of Iraq. Electronic payment activities are considered regulated financial services, and strict compliance with licensing, capital, governance, and AML/CFT requirements is mandatory. Types of Electronic Payment Activities: CBI licenses may cover one or more of the following activities, subject to approval: Electronic wallet services POS and merchant acquiring services Payment processing and switching Prepaid card issuance Mobile and digital payment platforms Each activity may be subject to specific operational and technical requirements. Key Regulatory Requirements: Applicants must demonstrate: Minimum capital as determined by the CBI Clear ownership and shareholder structure Fit and proper shareholders and management Robust governance and internal control frameworks AML/CFT and KYC compliance systems Secure technical infrastructure and data protection measures Viable business plan aligned with Iraqi market needs Foreign investors are subject to enhanced regulatory scrutiny and must appoint a local Iraqi legal representative. Step-by-Step Licensing Process Initial Application to the Central Bank of Iraq: Submit a formal request outlining the proposed electronic payment services, ownership structure, and business objectives. Submission of Business Plan & Documentation: Provide detailed documents including: Business and operational model Financial projections Governance and management structure AML/CFT, KYC, and risk management policies IT systems and cybersecurity framework Regulatory Review & Due Diligence: The CBI conducts a comprehensive assessment of: Shareholders and source of funds Management suitability Compliance readiness and system security Capital Deposit: Upon preliminary approval, the required capital must be deposited with a bank approved by the CBI. Company Incorporation: Register the company under the Iraqi Companies Law with the Companies Registration Department (Ministry of Trade). Final Licensing Approval: Once all regulatory conditions are satisfied, the CBI issues the electronic payment service license. Operational Readiness: Before launching operations, the company must: Finalize internal policies and SOPs Complete system testing and security validation Train staff and appoint compliance officers Obtain any additional approvals required Ongoing Compliance Obligations: Licensed electronic payment companies must comply with: CBI supervision and reporting requirements AML/CFT and sanctions regulations Transaction limits and wallet controls Consumer protection and data security rules Periodic audits and inspections Non-compliance may result in penalties, suspension, or license revocation. Investment Timeline (Indicative): The licensing process typically takes several months, depending on the scope of services, regulatory review, and readiness of the applicant. 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.  

Clarification on Electronic Payment Services Regulation

Central Bank of Iraq Issues Clarification on Electronic Payment Services Regulation The Central Bank of Iraq (CBI) has issued an official circular addressed to all licensed banks and non-bank financial institutions, concerning the Electronic Payment Services Regulation for Funds. The circular refers to the Electronic Payment Services Regulation No. (2) of 2024, which was issued pursuant to a Council of Ministers decision and published in the Official Gazette. The regulation establishes the current legal framework governing electronic payment services in Iraq. Key Regulatory Clarifications Confirmation of the issuance of the Electronic Payment Services Regulation No. (2) of 2024 Cancellation of the previous Electronic Payment Services Regulation No. (3) of 2014 Instruction to apply and operate in accordance with the new regulation Emphasis on compliance by banks and non-bank financial institutions   The circular confirms that the 2024 regulation is the governing framework, and all entities operating in the electronic payment sector must align their activities accordingly. This clarification reinforces the CBI’s role in: Regulating electronic and digital payment services Ensuring legal certainty and regulatory consistency Supporting the development of the electronic payment ecosystem Enhancing oversight of financial and payment institutions   All concerned entities are expected to review their operations, policies, and procedures to ensure alignment with the applicable regulation. 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.