Iraqi News Highlights Tuesday Early Evening

Iraqi News Highlights Tuesday Early Evening 6-20-23

Tlm724 Administrator Bondlady’s Corner

The Exchange Rate Of The Dollar On The Meeting Table Of The Anti-Money Laundering Council

Money  and business  Economy News – Baghdad  The Governor of the Central Bank of Iraq, Chairman of the Council for Combating Money Laundering and Financing of Terrorism, Ali Mohsen Al-Alaq, chaired today, Tuesday, the regular session of the Council for Combating Money Laundering and Financing of Terrorism.  The bank’s media stated in a statement, “The council hosted the Director General of the Legal Department and the Director General of the Real Estate Registration Department at the Ministry of Justice to discuss the mechanism for applying due diligence controls to combat money laundering and terrorist financing in the real estate registration departments.”

The Council reviewed, according to the statement, “the steps and preparations for the mutual evaluation of the Republic of Iraq to be conducted next August, taking a number of decisions in this regard with the aim of preserving Iraq’s advanced position in the control measures that resulted in its exit from the gray area in the international classification for the year 2018.”

During the session, the council discussed “developments in changes in the exchange rate of the dollar currency in informal markets, and the measures taken by the Central Bank of Iraq in this regard.”

Views 120    06/20/2023 –

The Central Bank Of Iraq Confirms Its Legal Powers In Inspection And Examination

June 20, 2023   The Central Bank of Iraq reaffirms what was stated in its amended Law No. 56 of 2004, indicating that the authority to examine and inspect banks and non-bank financial institutions is one of its duties exclusively.

 Central Bank of Iraq   information Office   20 – June  2023

Payments Department Activities

June 20, 2023   Payments department activities

    The most important activities carried out in the Iraqi payment system during the years 2015/2016/2017

       :diamonds: Modernizing the Iraqi Payments System:

    The Iraqi payment system with all its components RTGS, ACH, CSD was updated in 2015 in order to comply with international standards and regulations in the field of payments for the purpose of accommodating the increasing volume of transactions that take place through this system to easily comply with various banking systems.

    :diamonds: IBAN (International Bank Account Number) on the payment system (RTGS- ACH): It was established for the purpose of unifying bank account numbers in all banks operating in Iraq, which contributes to improving the level of financial and banking services, clearing services and settlement of payments locally and internationally. This is done by unifying the composition and specifications of the account number within the banking sector, and the formula for the unified bank number for Iraq has been chosen, as the IBAN number consists of 23 ranks.

    :diamonds: Implementation of the IRPS retail payment system infrastructure project, consisting of:

        The national exchange: which supports the clearing between banks for transfers made by customers and transactions that take place through the use of automatic teller machines and points of sale through credit cards that are linked to the bank account.

        Mutual payment system via mobile phone, where funds are transferred through electronic wallets without the need for a bank account, as well as transfers for bill payment and shopping can be made.

    :diamonds: Automating the work of internal control and adding the level of a supervisory system to activate the supervisory role of the RTGS system in the Central Bank of Iraq:

    For the purpose of activating the oversight role in the RTGS system, a new function was added by adding special fields, where the participant was able to check the types of payment orders through the system without the need for paper checks.

The auditing authority has special powers that cannot be viewed or acted upon by another authorized person, such as the entry authority Or authorized to authenticate, and the audit process is later after the completion of the transfer, and the audit process can be performed for previous dates in the system.

The main purpose of this feature is to indicate the audited entries from the unaudited entries of the senior management of the participants in the system and to reduce the effort and speed in implementing the internal audit process.

    :diamonds: IBCS (Inter Bank Clearing System)

    It is a system for internal clearing exchange for government banks (branches inside and outside Baghdad), which do not have a comprehensive banking system. This system enables the participating bank branches to send and receive files of payment orders and instruments among themselves in an automatic way. Transfers made through this system.

     :diamonds: Standardization of security specifications for sukuk:

    In order to provide greater protection for checks drawn on banks, reduce counterfeiting and ensure the validity of the issuance of checks, standardization of security specifications for checks drawn on all banks was adopted by choosing six types of security specifications without formality and colors, taking into account the selection of light colors when printing checks to avoid blurring the image of the check when printing Send it through the electronic check clearing system.

       :diamonds: Work with the World Bank to assess and prepare the Iraqi payments system in line with international standards PFMIs (Principles for Financial Market Infrastructures)

    Based on the principle of compliance of the Iraqi payment system with international standards, work has been done with the World Bank for the purpose of assessing the readiness of the payment system in line with the principles of the infrastructure of financial markets PFMIS, which consists of (24) standards and among the most important principles (credit risk management, operational risks, liquidity risks, legal foundations governance, final settlement, etc.).

    Salaries Localization Project:-

    Based on Cabinet Resolutions No. (313 of 2016, 281 of 2017) and based on the promotion of financial inclusion in Iraq, which includes the generalization of banking services to all segments of society, the Central Bank of Iraq is keen to meet all requirements for implementing the process of settling salaries in banks and applying the collection system In implementation of government directives in this regard, the project includes opening bank accounts for employees of ministries and government institutions.

A specific number of banks have been selected within specific criteria, which issue cards according to international standards linked to the bank account, in addition to evaluating them financially and technically according to the modern banking services that will be provided to the employee in a manner Safe and secure, which contributes to creating a strong competitive environment to provide the best services to the public. A number of uncles have been issued that regulate the process of paying salaries.

The salaries of the employees of the Central Bank in its two branches (Baghdad-Basra) have been localized to be an exemplary experience. So.

 :diamonds: Connecting comprehensive banking systems:

For the purpose of facilitating the flow of work and updating data electronically and without human intervention, a project to link banking systems has been implemented, where a number of banks have been linked to the Iraqi payment system, and work is underway to link all banks operating in Iraq, according to the time plan set by this bank with the rest of the banks, and a deadline has been set for the banks Which started work to complete the linking requirements for the first stage at the end of 2017, provided that the rest of the banks complete the linking requirements at the end of 2018.

:diamonds: Developing the CSD system by adding the following:

» Issuing Islamic Certificates of Deposit (ICD)

It is a type of transfer that will be traded and auctioned on the CSD system between Islamic banks and the Central Bank in exchange for achieving implicit profits under the Murabaha contract, and that the use of Islamic Certificates of Deposit (ICD) requires the existence of a contract between the Central Bank and Islamic banks on the one hand and with stock exchanges on the other hand.

      :diamonds: Investment Module:

    Where the investment restrictions for time deposits (7,14,30) on the CSD system are implemented directly by the banks.

       :diamonds: Developing financial markets by activating the secondary market through the Trading System

    For the purpose of activating the secondary market by providing a market or several markets for the exchange of various trading operations related to buying and selling orders for government bonds, the trading unit has been added to the CSD system as a separate unit linked to it to settle trading operations.

    The importance of the trading system is represented in activating the secondary market and facilitating the circulation of primary issues and converting them into cash when needed.

     :diamonds: The regional system for clearing and settlement of inter-Arab payments:

    A regional system has been established to settle inter-Arab payments related to economic and investment transactions across borders between Arab countries by linking Arab central banks. Consultant (BOOZ Company), and the design was approved and presented to the governors of Arab central banks.

    :diamonds: Formation of the Iraqi National Payments Council:

    In view of the expansion of the work of the Iraqi payment systems and the association of their business with external parties on the one hand and internal parties of institutions, ministries and agencies on the other hand, and for the purpose of developing strategies for developing payment and settlement systems and following up on their implementation, upgrading international best practices and ensuring the safety and efficiency of these systems in the financial markets and the development of infrastructure.

The Board of Directors of this bank approved the establishment of the Iraqi National Payments Council headed by the Central Bank and the membership of a number of ministries and departments from the public and private sectors, which works as an advisory circle to support the Central Bank of Iraq in defining its objectives and clarifying its strategic direction.

  :diamonds: Strengthening regional and international cooperation with the Central Bank of Iran:

    In light of the joint cooperation of both countries (the Republic of Iraq and the Islamic Republic of Iran), a document was concluded between the Central Bank of Iraq and the Central Bank of Iran in order to unify efforts in joint cooperation in the banking and financial fields, organizing financial transfers electronically, exchanging experiences and all kinds of knowledge in issues related to the exchange of information and regulatory legislation In accordance with international requirements, agreements and covenants with which both countries have entered into

     :diamonds: Financial Inclusion:

    Financial inclusion is the enhancement of the access and use of all segments of society, including the marginalized and the poor, of financial services and products that suit their needs so that they are provided to them in a fair and transparent manner and at reasonable costs.

The concept of financial inclusion includes protecting the rights of consumers of financial services and encouraging them to manage their money and savings properly, with the aim of Some people avoid resorting to informal channels and means that are not subject to oversight and supervision, and often adopt high prices.

Financial inclusion indicators have been identified in terms of measuring the availability of financial services that represent supply on the one hand, and measuring the extent of their use and exploitation on the other hand, represented by the demand side.

Therefore, financial inclusion aims to expand access to financial services, by working on developing both sides of supply and demand, and indicators have been sent to the concerned authorities for the purpose of measuring financial inclusion in Iraq, and Iraq has participated in the regional working group to enhance financial inclusion in the Arab countries in 2016 .

       :diamonds: Automating the work of ministries and government institutions:

    In order to keep abreast of developments in payment systems in the world, the Central Bank seeks to automate all financial transfers between state departments and institutions and to collect receivables through the Iraqi payment system by using payment orders instead of checks to reduce the risks resulting from transferring funds and counterfeiting checks and shifting from manual work to electronic work.

       :diamonds: Technical evaluation of banks:

    A questionnaire was prepared covering the technical aspects, electronic services and basic banking systems, through which the level of banking efficiency in providing electronic services to customers is inferred. This information is fielded and integrated with the results of the financial evaluation of banks for the purpose of standardizing the results and presenting them to the public.

       :diamonds: IRPSI retail payment system: The actual launch of the (Iraqi Islamic) bank with the national exchange (retail payment system) took place after the completion of all administrative, technical and organizational procedures and the completion of the linking operations.

    :diamonds: Payment through payment orders: for the purpose of transferring all financial transactions from paper transactions (check and cash) between the Central Bank and external parties to electronic payment, where work has been started using electronic payment orders (CT) through the electronic clearing system C-ACH to organize the work of committees Purchases in the process of paying dues to all third parties instead of using cash and checks.

   :diamonds: Automating the work of ministries and government institutions (activating electronic payment tools): holding workshops (the General Authority for Customs, the General Authority for Taxes) regarding the activation of electronic payment and collection tools to familiarize them with the system and mechanisms used for electronic collection, and it was agreed to start at one of the ports of the General Authority for Customs using payment orders Electronically (CT) to evaluate the experience and find out the problems and obstacles to avoid them when circulating to the rest of the customs outlets.

         :diamonds: The Nationalization of State Employees’ Salaries Project: In implementation of the directives of the General Secretariat of the Council of Ministers under Resolution (313) of 2016, and after the success of the process of nationalizing the salaries of the employees of the Central Bank of Iraq, the project was circulated to the rest of the ministries and government institutions and all their formations, and the salaries of employees of the Oil Pipelines Company and the Audit Bureau were localized Finance and work is underway to localize the rest of the ministries and state institutions.

    :diamonds: Completion of linking with universal banking systems: Abu Dhabi Bank has been linked to both systems (RTGS, C-ACH).

Foreign Transfer Regulations For The Year 2023

Republic of Iraq  Central Bank of Iraq   Department of Foreign Investment and Transfers

Foreign Currency Sale  Unit  No. 5/11/1083  Date: 19/2/2023

To: All licensed banks,  Greetings,

Based on the Central Bank of Iraq Law No. (56) of 2004 (as amended), and for the purpose of fulfilling the CBI objectives through reinforcement of the role of the banking system and non- banking institutions in securing the foreign currency to the beneficiaries in a way that would lead to maintaining the stability of the exchange rate of that currency on the one hand, and meeting the requirements requirements of applying the Anti-Money Laundering and Counter-Terrorist Financing Law No. (39) of 2015 on the other, and based on prerequisites of the best interest of business in line with the reform orientations for the banking sector in Iraq, something which would lead to improvement of the banking business according to the international best practices, the CBI has decided to adopt the attached “Foreign Transfer Regulations”.

 (signed)  Ali Mohsen Ismail  CBI Acting Governor  Chairman of Board of Directors  19/2/2023

Based on the Central Bank of Iraq Law No. (56) of 2004 (as amended) , and in line with the provisions of Article (28) of that law, which allows the Central Bank of Iraq to carry out simple unconditional buy and sell of foreign currency, with the aim of facilitating the financing procedures of international trade and fulfilling the goals of the Central Bank by strengthening the role of the banking system and non-banking financial institutions in securing the foreign currency to the beneficiaries, in a way that would lead to maintaining the stability of the exchange rates of that currency on the one hand, and simplifying the procedures for selling it, including oversight mechanisms and verification of daily sales operations on the other, with the necessity to commit to the requirements of the Anti-Money Laundering and Counter-Terrorist Financing Law No. (39) of 2015, it has been decided to adopt the following regulations:

Foreign Transfer Regulations for the year 2023

First: Entities that are allowed to be legally funded through the electronic platform

1. All types of companies that are registered with the Companies Registration Department of the Federal Ministry of Trade.

2. Projects registered with the General Directorate of Industrial Development of the Federal Ministry of Industry and Minerals.

3. Partnership companies that are duly established by the chambers of commerce (by virtue of an incorporation contract certified by a notary public) with an amount not exceeding (200,000) dollars (two hundred thousand dollars per month).

4. Branches of foreign companies registered with the Companies Registration Department of the Federal Ministry of Trade.

5. All kinds of investment projects that are licensed by investment commissions.

6. Agricultural and animal projects licensed by the veterinary departments or the agricultural investment departments of the Federal Ministry of Agriculture.

7. Scientific offices that are duly licensed by the Syndicate of Iraqi Pharmacists.

8. International factories distributors who are confirmed to be have been appointed by those factories for the purpose of operating in Iraq, and the agents whom the distributor certifies that they are appointed to work in the Iraqi market and are duly licensed to work in Iraq.

9. Agents of international companies, who are registered in accordance with the applicable Commercial Agency Law.

10. All types of companies, factories, laboratories, and projects that are licensed in the Kurdistan Region of Iraq, after submitting a proof of incorporation or a license from the relevant sectoral authorities, with legal translation into Arabic, and this shall cover a periodthat expires on 31/12/2023, provided that these entities shall register with the counterpart sectoral authorities in the federal government, as they shall not be allowed to subscribe to the electronic platform after the date mentioned above.

Second: Transactions that are permitted to be legally financed in foreign currency

1. Import of goods and commodities that are legally permitted to be imported.

2. Purchase and supply of legally permitted services, including shipping services.

3. Requests received by the Central Bank from governmental and public institutions and self- financed entities concerning needs for which there is no allocation in dollars within the federal general budget of the state, and that shall be confirmed by official documents that support these requests.

4. Augmenting the balances of the sub-accounts opened with JP Morgan Bank for banks and electronic payment companies that have major membership with international card companies (Visa, Master, and others).

5. Augmenting the balances of financial institutions that have major membership with international money transfer companies (Western Union, Money Gram and others) to settle their commitments with those companies after submitting the required statements.

6. Transfers made for legal transactions concerning the purchase of real estate property abroad, as follows:

First -The transfer must be for the account of the same customer in the foreign country in which the property will be purchased , or the account of real estate brokerage companies or law firms operating in those countries after verifying the customer’s name in the contract signed with the operating brokerage firm/law firm in the country in which the property is going to be purchased.

Second -Submission of proof of permanent or temporary residence from the competent authorities in countries whose laws allow for that. This shall not be required in the countries whose laws do not allow residence before owning the property.

Third -The customer must submit to the bank a proof of the legitimacy of the sources of the funds that he or she wishes to transfer.

Fourth-That the customer must submit to the bank a proof that he or she has purchased the property in a foreign country within a maximum period of six months from the date of the transfer.

7. Medical treatment abroad. The transfer must be from the account of the customer or one of their relatives of the first or second degree to the account of the hospital abroad after presenting a medical report from that hospital.

8. Payment of tuition fees abroad, and the transfer must be from the account of the student or one of their relatives of the first or second degree to the account of the university in which he or she is studying or to the account of the student themselves in the country of study after submitting a proof of study registration certified by the Iraqi Cultural Attaché in the country of study.

9. Transfers related to foreign investments in Iraq, and that shall be as follows:

First -The capitals of investment projects that have been granted investment licenses under the Investment Law (13) of 2006 and its amendments (after proving earlier entry of those capitals from outside Iraq for this purpose), and the returns of investment projects after submitting audited financial statements proving the realization of profits and substantiating the settlement of the investor’s obligations with the Iraqi government and the rest of the relevant entities within Iraq.

Second -Transferring the proceeds of selling shares to an Iraqi citizen residing abroad or a foreigner (the original value plus its returns, if any) in the event of selling them, provided that certification of the fact is provided by the Iraq Stock Exchange.

10. Compensation decided or approved by Iraqi official bodies for foreigners, or for Iraqi citizens residing abroad.

11. Profits of shareholders of companies registered in Iraq after submitting duly audited financial statements in addition to submitting proof of the company’s tax clearance and the minutes of the meeting of the general assembly approving the distributions or the board of directors, and that the transfer shall be made after proving that the applicant resides abroad and the transfer is for an account opened abroad in their name exclusively.

12. Amounts of financial proceeds (sale of real estate or other assets or their returns) to an Iraqi citizen residing abroad, provided that the transfer is from their account or their agent’s account inside Iraq to their account or their company’s account abroad exclusively.

13. Due payments related to banking and credit facilitations through which the customer has been associated with banks outside Iraq (the original commitments or interest due on them).

This shall require that the bank keep a documented declaration from the customer that includes the following:

a) The loan contract signed between the customer and the bank that granted him or her credit banking facilitations outside Iraq, with details and the reasons for which the loan was granted.

b) Submission of evidence that the original banking and credit facilitations have entered Iraq through the banking system or by way of goods.

Third: Procedures for subscribing to the electronic platform

1. Applications by bank customers wishing to buy dollars for the purpose of financing their foreign imports shall be submitted through the platform, provided that they include the data concerning the transfer operation, including (data of the customer requesting the transfer, data of the final beneficiary, trade list data, data of the intermediary and correspondent bank), and the equivalent of that in Iraqi dinars shall be recorded on the bank’s current accounts opened with the Central Bank/the type of account designated for subscription operations in the platform, provided that the bank is committed not to change the final beneficiary of the transfer process after subscribing to the platform.

2. A bank shall support the purchase request via the platform with the following attachments:

First – The commercial list (invoice) provided that it has an expiration date that does not exceed six months from the date of making the application on the platform, and twelve months for the invoices covering the manufacture of machines and production lines, and that may be in the form of a preliminary, final, or deferred payment invoice, or a contract Purchase.

Second – An undertaking that is made in accordance with Form No. (1) shall be attached to each application and by which the bank undertakes to verify the integrity and legality of the sources of funds of its importing customers and compliance with the requirements of the Anti-Money Laundering and Terrorist Financing Law No. 39 of 2015. Otherwise, the bank shall bear all the legal consequences resulting from that. The undertaking is to be signed by each of the (managing director, regional director or their representative, Compliance officer, Anti-Money Laundering Officer, and Risk Management Officer)

Third – An undertaking that is made in accordance with Form No. (2) shall be attached to each transfer request (a documentary credit or external transfer) and in which it is to be stated that all operations of searching, investigating and verifying all parties related to the transfer process , including the final beneficiary, have been done on the local and international sanctions lists, especially the (OFAC) lists and those concerning the freezing of terrorist funds, when submitting a transfer request through the platform.

Fourth – A deposit entry made by means of the Real-Time Gross Settlement System (RTGS) in Iraqi dinars that is deposited in the account designated for subscription operations on the platform, provided that it shall be within a period of two working days preceding the date of executing the sale transaction or as decided by the Central Bank, indicating the date and type of engagement.

Fourth: Obligations of banks subscribing to the electronic platform

Banks must be committed to the following:

1. Apply the principle of “know your customer” in accordance with the due diligence procedures stipulated in the Anti-Money Laundering and Terrorist Financing Law No. 39 of 2015 and related compliance regulations.

2. Banks must keep statements about their accounts with correspondent banks, including details of the account movement, which disclose the uses of the amounts of money transferred by the Central Bank.

3. For the purposes of documentary credits and external transfers that are used to finance the import of legally permitted goods or services, banks must open a file that includes:

a) An item that confirms the purchase of the goods or the provision of the service (the commercial list that was presented on the platform), and this list shall be the only requirement when creating the transfer request on the platform.

b) A bill of lading (in the case of transfers for importing goods), provided that the name of the customer making the transfer is mentioned either in the box of (the party for which the goods are shipped) , (the party receiving the notification) or (under a contract between the customs broker and the buyer), provided that the bill of lading is issued by the same country to which the transfer is made.

If it is issued from a country other than the one to which the transfer is made, then it shall be a prerequisite to prove the relationship between the two parties (the recipient of the transfer and the policy issuer). The bill of lading is the only requirement for the post-audit of transfers.

c) Evidence of receipt or provision of the service to the customer (in the case of transfers for the purposes of services). The proof document of service provision is the only requirement for the post-transfer audit.

d) Documentary credit documents (in the case of credits for the import of goods) , and these documents are the only requirement for post-audit of transfers made by way of documentary credits.

e) SWIFT messages for executing the transfer operation.

f) Evidence that the bank has conducted the process of search, investigation, and verification on all parties related to the transfers, including the beneficiary, on local and international sanctions lists, especially (OFAC) lists and those of freezing terrorist funds, before executing the transfer operation, provided that the process of searching and investigating the names of the relevant parties be made in both English and Arabic languages.

Fifth: Final Provisions

1. The Central Bank guarantees that the data of customers subscribing to the electronic platform will not be shared with any party except by a final judicial decision, and it also guarantees that the data will not be shared retrospectively except under the same condition.

2. The Central Bank shall sell foreign currency according to the official rate declared by it, provided that the margin of dollar sale made by a bank to its customer does not exceed (10) Iraqi dinars (ten dinars) for each dollar.

3. Request for Foreign currency transfer shall be submitted on the electronic platform within a period of two working days preceding the date of execution of the transfer operation, or as decided by the Central Bank.

4. Any sale or purchase of foreign currency that does not comply with the regulations included in this document shall be excluded.

5. In the event that a bank is proven to have transferred to any person or entity that is subject to local or international sanctions, it will be permanently barred from taking part in the foreign currency sale window.

6. The submission by banks and non-banking financial institutions of data and documents related to the process of subscribing to the electronic platform to the Central Bank and the receipt by the Central Bank of those data and documents does not constitute an automatic acceptance of these documents and data or any certification of their validity, as these they shall be subject to scrutiny in the manner, mechanism and time specified by the Central Bank.

7. The cases that are not included in the transactions that are considered legally permitted to be financed according to these regulations shall be studied by the relevant departments, and each case shall be presented to the management of the Central Bank to issue its decision on that regard.

8. These regulations shall enter into force as of the date of initiating the operation of the electronic platform for external transfers.

9. The instructions for buying and selling foreign currency of the year 2021 shall be revoked.

(signed)  Ali Mohsen Ismail  CBI Acting Governor  Chairman of Board of Directors  19/2/2023

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