The challenges facing Arab banks in complying with international laws and regulations and meeting the requirements of correspondent banks

28-29 April 2024          Baghdad – The Republic of Iraq

Banks and financial institutions around the world face increasing and complex regulatory requirements and increased scrutiny of their compliance frameworks, especially with regard to combating money laundering and terrorism financing. This complex and highly demanding global regulatory environment imposes more measures on correspondent banks. While preventing money laundering and terrorism financing is of utmost importance, the same attention should be devoted to other economic and social priorities, such as growth, employment, and social and human development.

During the past years, the Iraqi banking system has witnessed significant developments in various operational, regulatory, and regulatory aspects, and Iraqi banks are now applying the highest standards of compliance and combating financial crimes, most notably money laundering and terrorism financing, and adopting all relevant international standards and best practices. However, until now, Iraqi banks have experienced challenges to fully integrate into the international financial system and fully engage in international financial markets. To address this matter, the relevant Iraqi authorities, led by the Central Bank of Iraq, have taken various measures, such as developing the financial and banking legislations and issuing the necessary regulations and circulars to enhance the compliance of Iraqi banks and their adherence to the international laws and regulations that govern banks. On the other hand, the Iraqi banks, in turn, have modernized their technical and human infrastructure in terms of compliance, risk management, and governance. Nonetheless, some international correspondent banks are still hesitant to open channels with Iraqi banks, which places restrictions on the full integration of Iraqi banks into the global financial system.