By John Lee.
Iraq has been added to the Financial Action Task Force (FATF) list of jurisdictions under increased monitoring -- commonly known as the grey list -- following the organisation's June 2026 plenary session.
Iraq made a high-level political commitment to work with the FATF and MENAFATF to strengthen the effectiveness of its anti-money laundering and counter-terrorist financing (AML/CFT) regime. The listing follows the adoption of Iraq's Mutual Evaluation Report (MER) in November 2024.
According to the FATF, Iraq has made progress on the MER's recommended actions, including applying market entry controls to prevent criminals and terrorists from accessing key sectors, providing guidance to non-banking financial institutions and designated non-financial businesses and professions (DNFBPs), introducing measures to mitigate risks in the real estate sector, and enhancing understanding of how legal persons can be misused for money laundering and terrorist financing.
Under its action plan, Iraq is required to:
- Enhance its understanding of specific money laundering and terrorist financing risks and adopt appropriate risk-based preventive measures
- Improve detection of informal money or value transfer services, establish a legislative framework for virtual asset service providers (VASPs), and apply effective sanctions for AML/CFT breaches
- Ensure financial institutions and DNFBPs apply targeted financial sanctions and politically exposed persons (PEP) measures
- Increase the quantity and quality of suspicious transaction reports, with a focus on high-risk sectors
- Enhance risk-based implementation of beneficial ownership measures
- Pursue more money laundering investigations and prosecutions, and review sentencing in such cases
- Pursue more terrorist financing investigations and prosecutions, and address technical compliance issues in relation to the terrorist financing offence
- Develop a robust understanding of the non-profit organisation (NPO) sector and implement risk-based measures without disrupting legitimate NPO activities
- Enhance its ability to identify and combat proliferation financing sanctions evasion
Full statement from FATF:
In June 2026, Iraq made a high-level political commitment to work with the FATF and MENAFATF to strengthen the effectiveness of its AML/CFT regime. Since the adoption of its MER in November 2024, Iraq has made progress on its MER's recommended actions, including through applying market entry controls to prevent criminals and terrorists from accessing important sectors, providing guidance and outreach to non-banking financial institutions and DNFBPs, introducing measures to mitigate the risks in the real estate sector, and enhancing authorities' understanding on how legal persons are misused for ML/TF. Iraq will continue to work with the FATF to implement its FATF action plan by (1) enhancing its understanding of specific ML/TF risks and adopting appropriate riskbased preventive measures, (2) enhancing the detection of informal money or value transfer services, establishing a legislative framework for VSAPs and applying effective, proportionate and dissuasive sanctions for breaches of AML/CFT requirements, (3) ensuring FIs and DFNBPs apply TFS and PEP measures (4) increasing the quantity and quality of STRs with a focus on high-risk sectors and demonstrating an increase use of financial information particularly related to DNFPBs, (5) enhancing risk-based implementation of beneficial ownership measures, , (6) pursuing more ML investigations and prosecutions of ML and reviewing sentencing in ML cases, (7) pursuing more TF investigations and prosecutions in relation to specific TF risks and addressing the technical compliance issues in relation to its TF offence, (8) developing a robust understanding of the NPO sector and the TF risks affecting NPOs and implementing risk-based measures while avoiding undue disruption or other unintended consequences for legitimate NPO activities and (9) enhancing its ability to identify and combat PF TFS evasion.
(Source: Financial Action Task Force)
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