Iraq — Country Risk Report

Iraq (Middle East • Western Asia). Risk report as of the 19 Jun 2026 FATF plenary.

High country risk, with AML/CFT effectiveness gaps. Iraq's country risk score is 6.0/10, placing it in the high-risk band. The principal score driver is AML/CFT effectiveness, contributing 3.0 of 6.0 points. Separately, the treatment overlays show that Iraq is subject to FATF increased monitoring, and that Iraq has a sectoral sanctions programme. Firms should apply additional scrutiny where exposure involves state-linked entities, restricted sectors, sensitive technology, dual-use goods or politically exposed counterparties.

Recommended treatment

Enhanced due diligence on every relationship, with senior approval and enhanced ongoing monitoring.

At a glance

• FATF status: Grey list (one indicator only; it does not set the overall country risk rating by itself)
• Sectoral country-level sanctions programme identified; this is a legal treatment overlay and does not change the numeric country-risk score.
• Governance and institutions: 6.7/10
• Corruption (CPI 2025): 28/100, rank #136 of 182
• Enforcement data: not yet assessed (no RegActions coverage)

Country Risk Score: 6.0/10 (High)

Higher score means higher country risk (global average 5.5). Full information available. Composite score. Strong supporting evidence. Enforcement activity and CPI are context only; FATF listing and sanctions are regulatory overlays except the labelled FATF listing status used where no mutual evaluation exists.

All three underlying risk pillars are available. All three underlying risk pillars are available and weighted using the published formula. Weight sensitivity 5.9–6.1/10.

How this score was calculated

• AML/CFT effectiveness: 6.7/10 — 45% of this score
• Technical compliance: 3.3/10 — 20% of this score
• Governance and institutions: 6.7/10 — 35% of this score

Sanctions treatment: Screen transactions and counterparties. FATF treatment: increased monitoring.

Principal risk drivers

• AML/CFT effectiveness: 6.7/10 × 45% = 3.0 points
• Governance and institutions: 6.7/10 × 35% = 2.3 points
• Technical compliance: 3.3/10 × 20% = 0.7 points

Mitigating factors

• No comprehensive country-wide sanctions programme.
• Risk is concentrated in specific counterparties, sectors and transactions rather than applying uniformly.

Business impact

• Customer onboarding (Enhanced): Verify ultimate beneficial ownership and control from more than one source.
• Payments and transactions (Enhanced): Review transaction purpose, counterparties and the full payment routing.
• Trade and export activity (Enhanced): Screen goods, end users and potential dual-use exposure.
• Corporate clients (Enhanced): Assess state ownership, government links and political exposure.
• Ongoing monitoring (Enhanced): Alert on ownership changes, new designations and status changes.

Recommended controls

• Verify ultimate beneficial ownership using more than one reliable source.
• Identify state ownership, government influence and politically exposed persons.
• Screen entities, directors and beneficial owners against applicable sanctions lists.
• Apply enhanced review to technology, defence, telecommunications, financial services and dual-use activity.
• Document transaction purpose and source of funds where cross-border structures are complex.
• Escalate unresolved ownership opacity or adverse information to Compliance.

Enhanced due diligence triggers

• State ownership / control
• PEP involvement
• Sensitive / restricted sectors
• Opaque ownership
• Adverse media
• Dual-use goods & technology
• High-risk intermediary routing

FATF status: Grey list

Jurisdiction Under Increased Monitoring. Listed 19 Jun 2026. Added to increased monitoring at the June 2026 plenary. Last reviewed 19 Jun 2026; next FATF plenary Oct 2026.

Sanctions: Sectoral

• EU — sectoral: Restrictive measures on Iraq (source)
• OFAC — targeted: Iraq-Related Sanctions (source)
• UK — targeted: Iraq sanctions (source)
• UN — targeted: 1518 Iraq sanctions (source)

Source details

International sanctions by issuing body

• UN: Yes (Targeted)
• EU: Yes (Sectoral)
• UK: Yes (Targeted)
• US: Yes (Targeted)

No means the complete UN, UK, EU and US review found no direct country-level programme. People or organisations may still appear on sanctions lists.

Government effectiveness and rule of law (World Bank 2024, percentile)

• Government Effectiveness: 30/100
• Regulatory Quality: 39/100
• Rule of Law: 34/100

FATF status history

• 19 Jun 2026: Added to the FATF grey list

Regulators and legal framework

FATF network

FATF network via MENAFATF.

• Middle East and North Africa Financial Action Task Force

Last mutual evaluation: 2024 · report

National regulators

Regulator profiles not yet available on RegActions.

FIU: Egmont Group member (IQFIU)

Framework signals

• FATF listing: Grey list
• International sanctions: sectoral country programme (legal treatment overlay)
• Corruption (CPI 2025): 28/100, rank #136 of 182
• Rule of law (WGI): 6.6/10 risk

Regulatory ecosystem and enforcement visibility

This evidence map is separate from Country Risk v3. It describes official mandates, publication access and RegActions coverage; it does not judge regulatory strength or add points to country risk.

Transparency Index: not scored · Evidence disposition: local-authority-evidence · Mapped official authorities: 2.

Evidence level: Level 3: Enforcement visible. The ladder uses the authority evidenceLevel schema directly and does not infer a level from a URL, site access or RegActions feed count.

1. 1. Identity confirmed — The authority and its mandate are evidenced by official directory provenance.
2. 2. Regulatory activity visible — A qualified authority-owned route has provisional dated activity in the first-page scan.
3. 3. Enforcement visible — A qualified authority-owned enforcement route has provisional dated activity in the first-page scan.
4. 4. Score eligible — Shown only when the authority evidence schema explicitly records score-eligible; no authority currently does.

Enforcement visibility: 1 authorities are classified enforcement-visible by the authority evidence schema, based on qualified authority-owned route evidence and provisional first-page month observations. This is not a validated engagement frequency.

Authorities and mandate evidence

• Anti-Money Laundering and Countering Financing of Terrorism Office of Iraq — Level 1: Identity confirmed · Official site reachable

  Mandates: Financial intelligence · Access status: Official site reachable · Research/publication snapshot checked: 2026-08-20

  Official authority site

  Provisional first-page scan signal

  Signal: unknown · Observed month count: 0 · Latest observed month: unknown.

  No qualified authority-owned dated route supports an activity signal. This is not evidence of inactivity; blocked, external-context, low-frequency and unvalidated sources remain unknown.

  Scan contract and precision

  automated-first-page-date-scan · 2024-01 to 2026-08 · as of 2026-08-20 · month precision · first-page-only-unvalidated. This is not a validated engagement frequency.

  No publication candidate is qualified. Regulatory activity and enforcement visibility remain unknown.

• Central Bank of Iraq — Level 3: Enforcement visible · Official site reachable

  Mandates: Central bank · Access status: Official site reachable · Research/publication snapshot checked: 2026-08-20

  Official authority site

  Provisional first-page scan signal

  Signal: low-frequency · Observed month count: 1 · Latest observed month: 2026-07.

  Provisional automated first-page date scan on an authority-owned qualified route. It is not a validated publication frequency or effectiveness measure.

  Scan contract and precision

  automated-first-page-date-scan · 2024-01 to 2026-08 · as of 2026-08-20 · month precision · first-page-only-unvalidated. This is not a validated engagement frequency.

  Publication candidates and qualification

  • Official authority-owned enforcement route: مكتب مكافحة غسل الأموال وتمويل الإرهاب يناقش العقوبات المالية في خطة عمل (FATF)

    Authority-owned and approved for the human-reviewed route contract.

    Route type: sanctions_or_penalty_list · Source scope: authority-owned · Qualification: approved-for-human-contract · Provisional scan signal: low-frequency-first-page-signal · Observed months: 1 · Latest observed month: 2026-07

Download regulatory ecosystem PDF · CSV · JSON

Sector exposure

• Banking & payments (Elevated): FATF increased-monitoring overlay raises correspondent risk
• Trade & export controls (High): Sectoral sanctions overlay restricts named trade sectors
• Crypto & virtual assets (Elevated): FATF increased-monitoring overlay raises VASP supervision risk
• Real estate & luxury assets (High): BO subscore 7.1/10; CPI context 28/100
• State-linked & procurement (Elevated): Governance pillar risk is 6.7/10

Derived from sanctions tier, FATF listing, World Bank WGI governance and CPI; no per-sector dataset is asserted.

Iraq: analysis

Iraq combines a severely weak governance profile with recent FATF grey listing. All four governance domains are severely elevated. Corruption (severe) is the most critical, consistent with a very weak CPI reading and a position in the lowest third of the World Bank governance indicators. Political stability (severe) and rule of law and institutions (elevated) reflect the ongoing challenges of institutional reconstruction following prolonged conflict. Voice and accountability (elevated) is comparatively the least adverse domain but remains high. The FATF grey-list placement in June 2026 confirms that strategic deficiencies in Iraq's AML and counter-financing-of-terrorism framework have been formally identified. No sanctions exposure applies.

Outlook

Iraq's risk outlook is negative in the near term. The FATF grey-list placement requires Iraq to complete a remediation action plan under increased monitoring. Progress will depend on the pace of institutional reform, which faces structural headwinds from corruption and political fragmentation. Firms should treat Iraq as a very high-risk jurisdiction requiring enhanced due diligence and should monitor FATF progress reports for any change in listing status.

Key watchpoints

• FATF grey-list progress reviews and any action plan milestones that may indicate remediation trajectory.
• Corruption exposure in oil-sector revenues, state procurement, and public-official relationships.
• Terrorism financing risk given the regional security environment and the legacy of non-state armed group financing.
• Political stability developments, including coalition politics and their effect on AML supervisory capacity.

Assessment currency

• FATF status: Increased monitoring (as of 19 Jun 2026)
• Sanctions exposure: Sectoral programme in place (as of Jul 2026)
• Governance (WGI): Latest dataset incorporated (as of 2024)
• Corruption (CPI): 28/100 (as of 2025)
• RegActions assessment: Reviewed (as of 19 Jun 2026)

Public evidence layer

FATF action: increased monitoring. FATF identifies the jurisdiction as under increased monitoring; apply the firm's risk-based controls and monitor remediation progress.

Contextual signals (not scored)

• FATF network membership: FATF regional network: MENAFATF (present, as of 2026-07)
• EU non-cooperative tax jurisdictions: Not listed in Annex I (absent, as of 2026-02-17)
• Egmont Group FIU: IQFIU (present, as of 2026-07-17)
• Beneficial-ownership register: No live register identified in the source (unavailable, as of 2026-08-23)
• Transparency International CPI: 28/100, rank 136 (present, as of 2025)

Evidence freshness

• FATF monitored-jurisdiction status: current; data 2026-06-19
• FATF mutual evaluation and follow-up ratings: current; data 2026-08-24; follow-up 2024-05; base assessment 2024-05
• World Bank governance indicators: current; data 2024
• UN, UK, EU and US sanctions regimes: current; data 2026-08-30

Contextual signals are public evidence only and do not change the current country-risk score.

Download evidence PDF · CSV · JSON

Contextual risk evidence (not scored)

These eight evidence families provide context only. They do not change the v3.1 headline score. Unavailable means no reviewed, country-comparable evidence is currently ingested; it does not mean the risk is absent.

• Organised crime: Not available. No reviewed country-level organised-crime dataset is currently checked in; no risk value is inferred. Candidate sources are research leads only; they have not been ingested as evidence.
• Fraud and cybercrime: Not available. No reviewed country-level fraud or cybercrime dataset is currently checked in; no risk value is inferred. Candidate sources are research leads only; they have not been ingested as evidence.
• Terrorism and proliferation financing: Not available. No reviewed country-comparable terrorism/proliferation threat dataset is currently checked in; FATF listing status remains a separate overlay. Candidate sources are research leads only; they have not been ingested as evidence.
• Trafficking: Not available. No reviewed country-level trafficking dataset is currently checked in; no risk value is inferred. Candidate sources are research leads only; they have not been ingested as evidence.
• Financial secrecy and offshore exposure: Not available. No reviewed, licence-clean financial-secrecy index is currently checked in; jurisdiction type alone is not used as a proxy. Candidate sources are research leads only; they have not been ingested as evidence.
• Tax cooperation: Not listed in EU Annex I. Annex I is a political/legal tax-cooperation list, not a general AML, corruption, or country-risk score. Source
• Political stability and conflict: 31/100 WGI percentile. WGI is an institutional perception indicator, not a conflict event feed or a prediction of future violence. Source
• Beneficial ownership: Not available. The Open Ownership map is a live-register snapshot and absence means no register was identified in that snapshot, not that no register exists. Candidate sources are research leads only; they have not been ingested as evidence.

Regional peer scores

• Iran: 8.5/10 (Very high)
• Syria: 7.0/10 (Very high)
• Yemen: 7.0/10 (Very high)
• Palestine: 6.3/10 (High)
• Lebanon: 6.2/10 (High)
• Kuwait: 5.6/10 (High)

Source: FATF black & grey lists · World Bank WGI (CC BY 4.0 — World Bank WGI) · TI CPI (CC BY-ND 4.0 — Transparency International, display only)