New Regulation on Electronic Payment Services in Iraq

The Iraqi Cabinet has recently issued a significant regulatory update concerning electronic payment services for funds. The aim of this new regulation, published in the Official Gazette on April 29, 2024, is to strengthen the efficiency, security, and transparency within the financial sector. Replacing the previous regulation established in 2014, this update introduces a range of changes and enhancements.

Summary

The regulation defines electronic payment services as encompassing various activities related to the execution and management of both legal and non-prohibited financial transactions through electronic means. This includes fund transfers and different forms of electronic money payments, all facilitated and overseen by specifically tailored systems and technological infrastructures.

Entities intending to offer electronic payment services are required to obtain a license from the Central Bank of Iraq and adhere to its standards and regulations. These licenses are valid for a period of ten years and are subject to renewal upon request and approval. The Central Bank of Iraq holds exclusive authority over the regulation, registration, and licensing of third-party-operated electronic payment systems, as well as the supervision and monitoring of their compliance with legal frameworks and regulatory standards.

The regulation mandates that both service providers and the Central Bank of Iraq maintain records of all electronic payment transactions and related data for a minimum of five years. These records must be made available for inspection and audit when necessary, with certified copies provided to relevant parties. Furthermore, service providers are required to furnish financial guarantees or easily liquidatable assets for the settlement of financial transactions, in accordance with the Central Bank of Iraq’s stipulations, to ensure financial stability.

In the event of non-compliance, the regulation outlines penalties such as warnings, financial penalties, suspension, or revocation of licenses. Additionally, the Central Bank of Iraq is empowered to issue instructions, directives, and guidelines for the implementation and enforcement of the regulation. Service providers are obligated to adjust their operations to comply with the regulation within six months from its enforcement date.

The anticipated impact of this regulation is notably positive, as it establishes a comprehensive legal framework aimed at safeguarding consumers and fostering financial system stability in Iraq.

How can we help?

Al Tamimi & Company’s Iraq office is experienced in navigating the intricacies of the country’s financial regulations. Our dedicated team are committed to guiding stakeholders through the complexities of Iraq’s financial landscape, ensuring comprehensive support and understanding of the new e-payment legal framework. Please reach out to our key contacts below for further guidance and information on this topic.