Outbound transfers and foreign-company accounts with Iraqi banks
The Law Office of Ali Barakat in Baghdad sets out the general framework for transferring funds out of Iraq, and for opening a bank account for a foreign company with a licensed bank, as it appears in the official texts that could be reviewed in the Iraqi Legislation Database.
Transfers by electronic means, and what governs them
Article 24 of Electronic Signature and Electronic Transactions Law No. 78 of 2012, published in the Official Gazette, issue 4256 of 5/11/2012, permits funds to be transferred by electronic means. Article 25 requires every financial institution that carries on the business of electronic funds transfer to take the measures needed to provide customers with safe services and to preserve the secrecy of banking transactions. The permission is therefore qualified by the safety of the service and by the secrecy of the transaction. It does not lift any other limit laid down by the Banking Law or by the controls of the Central Bank of Iraq.
Regulation No. 2 of 2024 on electronic payment services for funds, published in the Official Gazette, issue 4771 of 29/4/2024, applies to electronic funds transfers and to electronic payment transactions and instruments, under article 3. Electronic payment services may not be provided except after a licence from the Central Bank, and licensed banks may provide those services after the Bank’s approval, under article 6 of the Regulation. The licensing path is set out on the page Licensing electronic payment and wallets.
An outbound transfer, if it is made through a licensed bank or a licensed provider, remains subject to the controls the Central Bank lays down within its competence under Central Bank of Iraq Law No. 56 of 2004, and to what applies to a licensed bank under the Banking Law issued as Coalition Provisional Authority Order No. 94 of 2004, published in the Official Gazette, issue 3986 of 1/9/2004. An article is quoted by number only from the official text of those statutes. The text in force, and the Bank’s instructions, are consulted when a particular transaction is examined.
If an electronic payment is refused, the provider must inform the customer of the reasons for refusal and provide guidance to correct the errors that led to the refusal, under article 15 of Regulation 2 of 2024. The provider must inform the customer of his or her rights and obligations, and must disclose commissions before the transaction is carried out where the text so requires, under article 13.
A foreign company’s account
Opening an account for a foreign company with a licensed bank in Iraq is a banking act that the bank performs within the limits of its licence and of the Central Bank’s controls, and after verifying the company’s identity and its incorporation documents or, as the case may be, the documents for registration of its branch. The documents are those the official text and the competent body require. An investment licence or the registration of a branch, if one exists, is a path separate from the account contract, and is read on its own page.
The secrecy of banking transactions, which article 25 of Law 78 of 2012 imposes on an institution that carries on electronic transfers, does not mean that an account is immune from attachment under Enforcement Law No. 45 of 1980 when the bank stands in the position of a third party, as set out on the page Attaching movables, wages and accounts. Secrecy is one path. Compulsory attachment is another, and is fixed by the Enforcement Law.
Legal basis and sources
- Electronic Signature and Electronic Transactions Law No. 78 of 2012 (Official Gazette No. 4256 of 5/11/2012)
- Regulation No. 2 of 2024 on electronic payment services for funds (Official Gazette No. 4771 of 29/4/2024)
- Central Bank of Iraq Law No. 56 of 2004
- Banking Law (Coalition Provisional Authority Order No. 94 of 2004) (Official Gazette No. 3986 of 1/9/2004)
Frequently asked questions
May funds be transferred by electronic means?
Yes, under article 24 of Law 78 of 2012, subject to the financial institution’s duty to provide safe services and to preserve the secrecy of transactions under article 25, and subject to the Central Bank’s controls and the Banking Law remaining in place.
Is a wallet licence enough for an outbound transfer?
The licence of a payment-service provider is the framework of Regulation 2 of 2024. An outbound transfer may also be subject to the Central Bank’s controls and to the rules of the licensed bank. The transaction is not reduced to a single licence if the text imposes further limits.
Where are the documents for opening a foreign company’s account checked?
The licensed bank and the Central Bank’s controls in force are consulted when the account is opened.