Dealing with a bank
The Law Office of Ali Barakat in Baghdad follows dealings with a bank as a legal constraint: opening an account, a transfer inside Iraq or out of it, banking secrecy and its exceptions, and the licensing of electronic payment services and wallets by the Central Bank of Iraq (البنك المركزي العراقي).
Which texts are referred to?
The sources are the Iraqi Banking Law issued pursuant to Coalition Provisional Authority Order No. 94 of 2004, published in the Official Gazette, issue 3986 of 1/9/2004, with the title and issue number as they appear in the Iraqi Legislation Database; and the Central Bank of Iraq Law of 2004, issued pursuant to Coalition Provisional Authority Order No. 56. The Database record for the latter statute did not show an Official Gazette issue number, so the title and the Database link are given, and no issue number is invented. The Central Bank of Iraq supervises banks and financial institutions within the limits those two texts set.
The licensing of electronic payment services and wallets is organised by Regulation No. 2 of 2024 on electronic payment services for funds, issued pursuant to Council of Ministers Decision No. 24276, and published in the Official Gazette, issue 4771 of 29/4/2024. Electronic Payment Services Regulation No. 3 of 2014 appears in the Database on one record as repealed. For that reason the 2014 regulation is not the text in force, and Regulation No. 2 of 2024 is referred to. Which body grants the licence, and what documents are involved, are set out in licensing of electronic payment and wallets.
Islamic Banks Law No. 43 of 2015 is present in the Database, and is a special statute for Islamic banks. The general framework is that of the Banking Law and Central Bank supervision, and the provisions on an Islamic bank are read in their own special text.
Accounts, transfers and secrecy
Opening a bank account for a natural person or for a company, including an account for a company formed outside Iraq, and a transfer out of Iraq, are subject to the rules of the Central Bank of Iraq, the Banking Law, and what the legislation in force requires for the prevention of money laundering, within the limits of that legislation. Rates, ceilings and operational steps are read from the official text that sets them. The legal aspects of outbound transfers and of opening an account for a foreign company are set out in outbound transfers and a foreign company’s account.
Banking secrecy is a legal constraint on the bank and on anyone who, by reason of their work, sees a customer’s data, with the exceptions laid down in the Banking Law and in Central Bank instructions, including reporting of transactions that the law requires to be reported. Disclosure within the limits the statute permits is not a breach of secrecy.
Attachment of a bank account on the general enforcement path is the subject of attaching movables, wages and accounts. The bank’s position when it is served with an attachment decision is a duty to carry out what the enforcement officer notifies, within the limits of the Enforcement Law.
What falls under Central Bank supervision
The Banking Law organises the licence to carry on banking business in Iraq, restrictions on the grant of credit, and what concerns the management of a bank and its financial position, within the limits the text sets. The Central Bank of Iraq is the licensing and supervisory authority on that path. Capital requirements and prudential ratios are read from the text in force at the time, and may change by later instructions.
A transfer between two accounts inside Iraq and a transfer to an account outside Iraq are not merely operational arrangements. They are subject to the rules of the Central Bank of Iraq and to what the legislation in force requires for identifying the customer and the source of funds. Opening an account for a company formed outside Iraq is distinct from opening an account for an Iraqi natural person, and from an account of a foreign-company branch recorded in Iraq. Those differences are set out on the transfers-and-accounts page.
Electronic payment services and an electronic wallet are not a substitute for a banking licence, even if they may be offered by a bank or by a licensed provider. The useful question is whether the person being dealt with is licensed by the Central Bank of Iraq under the 2024 Regulation. The list of licensed persons changes, and reference is made to what the Central Bank of Iraq publishes.
This field is distinct from a tax assessment and from an investment licence, even if files sometimes meet in practice: a bank account, a tax number and an investment licence each rest on their own legal basis and are obtained on their own path.
Who may carry on banking business?
Article 3 of the Banking Law limits banking business in Iraq to holders of a licence or permit from the Central Bank of Iraq, and article 1 defines banking business as receiving cash deposits or other repayable funds from the public in order to place them in credit or investments for the recipient’s own account. Paragraph 4 of article 3 bars the use of the word “bank”, or any derivative of it in any language, to describe a business, product or service without a licence or permit. When a contract is made with a body offering to take funds, its legal standing matters, not the trade name it uses.
The Law separates three forms of foreign banking presence. A bank formed in Iraq that is wholly or mainly owned by a foreign party needs a prior licence under article 4; a branch of a foreign bank opens under a permit under article 6; and a representative office, under article 7, is confined to providing information and liaison and may neither take deposits nor carry on banking business. Article 9 requires prior notice to, and prior approval of, the Central Bank before any bank opens a branch or representative office or forms a subsidiary in Iraq, and before a domestic bank does any of those things abroad.
On timing, article 8 requires the Central Bank to tell an applicant within two months whether an initial application is complete, and to approve or refuse it within six months of that notice, with an extension allowed in exceptional cases if the applicant is told the reasons before the deadline. Under article 10, the Central Bank keeps a central register of banks open to public inspection, recording each licensed bank’s name, address and licence or revocation date, and information on its administrators and the scope of their authority to bind it. That register is the starting point when checking the standing of a counterparty and the authority of the person signing for it.
When may customer data be disclosed?
Article 49 makes customers’ accounts, deposits, deposited items and safe boxes confidential to the bank, and permits information about them to be given only with the customer’s written consent; after death, with the consent of the legal representative, an heir or a legatee; by decision of a competent judicial authority; at the request of the Public Prosecution (الادعاء العام) in pending litigation; or in a case the Law permits. The prohibition survives the end of the banking relationship. Article 50 extends it to current and former administrators, employees and agents, and to Central Bank staff and auditors who see the data through their work.
Article 51 lists the lawful cases of disclosure, including auditors performing their duties, information the Central Bank requires for its functions, steps taken in good faith to apply anti-money-laundering and counter-terrorist-financing measures, a certificate of the reasons for refusing to pay a cheque at the holder’s request, exchange of information on customer indebtedness and returned cheques under Central Bank regulations, and a bank disclosing a customer’s transactions to prove its own claim in a court dispute between them. In practice, where an account statement is sought in an action before the Court of First Instance (محكمة البداءة), the request goes through the court, not by a letter from the opposing party to the bank.
Supervision and challenging Central Bank decisions
Article 53 empowers the Central Bank to review what banks submit, ask for further explanations, and carry out on-site inspection at any time, with every bank inspected at least once a year and representative offices at least once every two years. Article 56 allows the Central Bank, on a breach of the Law or unsound operations, to issue a written warning or orders, require a remedial programme, suspend certain operations or bar the distribution of profits, or restrict lending. A licence may be revoked only by a Central Bank decision resting on one of the grounds listed in article 13. Under article 12, a bank may not end its operations without prior approval, and a voluntary cancellation is granted only once its obligations to depositors, customers and employees have been met.
Article 105 opens an appeal to the Financial Services Court within thirty working days of receipt of the decision, against refusal or revocation of a licence and against administrative measures and penalties under article 56(2). Filing the appeal does not by itself suspend the decision, and the Court’s rulings are subject to judicial review as the Central Bank of Iraq Law provides. Time therefore runs from the day of notification, and the file is assembled before it expires.
What does the office follow?
From its premises in Baghdad, the office explains the nature of dealings with a bank in the light of the Banking Law, the Central Bank of Iraq Law and Electronic Payment Services Regulation No. 2 of 2024: opening an account, transfers, secrecy and its exceptions, and the licensing of payment-service providers and wallets.
Legal basis and sources
- The Iraqi Banking Law (Coalition Provisional Authority Order No. 94 of 2004) (Official Gazette, issue 3986 of 1/9/2004)
- Central Bank of Iraq Law of 2004, issued pursuant to Coalition Provisional Authority Order No. 56
- Regulation No. 2 of 2024 on electronic payment services for funds, issued pursuant to Council of Ministers Decision No. 24276 (Official Gazette, issue 4771 of 29/4/2024)
Frequently asked questions
Who supervises banks in Iraq?
The Central Bank of Iraq, under its statute and the Banking Law of 2004, within the limits those two texts set.
Who licences electronic payment services and wallets?
The Central Bank of Iraq, under Electronic Payment Services Regulation No. 2 of 2024. The details of an application are on a separate page.
Where is attachment of a bank account covered?
Attachment of an account in general enforcement is set out on the attachment page under debt recovery. The bank’s duty when served follows the Enforcement Law within those limits.
May a foreign bank’s representative office open an account or take a deposit?
No. Article 7 of the Banking Law confines a representative office to providing information and liaison, and bars it from taking deposits or carrying on banking business.
Who may see a customer’s account statement?
The customer, anyone the customer consents to in writing, after death the legal representative, heirs or legatees, a competent judicial authority or the Public Prosecution in pending litigation, and the other cases in article 51, under articles 49 and 51.
What is the time limit to challenge refusal or revocation of a banking licence?
Thirty working days from receipt of the decision, before the Financial Services Court, under article 105 of the Banking Law.
Topics in this area
- 01Licensing electronic payment and wallets under Regulation 2 of 2024Licensing an e-payment provider and digital wallet under Regulation 2/2024 (Cabinet Decision 24276): Central Bank application, periods and challenge.
- 02Outbound transfers and foreign-company accounts with Iraqi banksOfficial framework for electronic outbound transfers and a foreign company’s account at a licensed Iraqi bank, without inventing article numbers.