Iraq — Country Risk Report

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

High country risk, with elevated corruption risk. Iraq's country risk score is 6.0/10, placing it in the high-risk band. The principal driver is weak corruption, alongside political stability risk. Iraq is subject to FATF increased monitoring. Iraq is not subject to comprehensive country-wide sanctions. 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.

At a glance

  • FATF status: Grey list (one indicator only; it does not set the overall country risk rating by itself)
  • Comprehensive country sanctions: none identified. Targeted sanctions exposure: programmes in place, screen applicable lists
  • Government effectiveness and rule of law: 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 4.6). Full information available. Strong data coverage. Enforcement activity and CPI are shown for context but do not change the score.

All three parts of the score are available.

How this score was calculated

  • Financial crime controls: 5.7/10 — 50% of this score
  • Government effectiveness and rule of law: 6.7/10 — 30% of this score
  • International sanctions: 5.9/10 — 20% of this score
  • FATF grey-list status sets a minimum of 6.0, but the calculated score was already higher.
  • sector-wide international sanctions sets a minimum of 6.0, but the calculated score was already higher.
Show the exact calculation

aml 5.7 × 50% + governance 6.7 × 30% + sanctions 5.9 × 20% = 6; fatf-grey floor 6 non-binding, sanctions-sectoral floor 6 non-binding; final 6

Principal risk drivers

  • FATF increased-monitoring status
  • Sectoral sanctions exposure
  • Corruption (WGI) — 7.7/10
  • Political stability — 6.9/10
  • Rule of law & institutions — 6.6/10

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 (High): Additional ownership and control verification may be required.
  • Payments and transactions (High): Review transaction purpose, counterparties and geographic routing.
  • Trade and export activity (High): Screen goods, end users and potential dual-use exposure.
  • Corporate clients (High): Assess state ownership, government links and political exposure.
  • Ongoing monitoring (High): Apply alerts for ownership changes, sanctions and geopolitical developments.

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.

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 exposure
  • Corruption (CPI 2025): 28/100, rank #136 of 182
  • Rule of law (WGI): 6.6/10 risk

Sector exposure

  • Banking & payments (Elevated): FATF grey-list status elevates correspondent-banking risk
  • Trade & export controls (High): Sectoral sanctions: Restrictive measures on Iraq
  • Crypto & virtual assets (Elevated): FATF grey-list VASP supervision gaps raise virtual-asset risk
  • Real estate & luxury assets (Elevated): Elevated corruption exposure (CPI 28/100)
  • State-linked & procurement (High): High state-capture risk (corruption WGI 7.7/10)

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: Targeted programmes 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 2026-07-17)
  • 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 2026-07-31; follow-up 2024-05; base assessment 2024-05
  • World Bank governance indicators: current; data 2024
  • UN, UK, EU and US sanctions regimes: current; data 2026-08-13

Contextual signals are public evidence only and do not change the immutable v2 score.

Download evidence PDF · CSV · JSON

Regional peer scores

FAQ

Is Iraq on the FATF grey list?

Yes. As of the 19 Jun 2026 FATF plenary, Iraq is on the FATF grey list (Jurisdictions Under Increased Monitoring). This is one AML indicator and does not by itself set Iraq's overall country risk rating. The next FATF plenary review is scheduled for Oct 2026.

Is Iraq subject to sanctions?

Partly. Iraq has sectoral sanctions exposure rather than a comprehensive country-wide programme. Firms should screen applicable persons, entities and sectors against the OFAC, UK, EU and UN lists.

What is Iraq's country risk rating?

RegActions rates Iraq at 6.0/10 (High risk), where a higher score means higher country risk. The score combines financial crime controls, government effectiveness and rule of law, and international sanctions. Transparency International's 2025 Corruption Perceptions Index scores Iraq 28/100 (rank #136 of 182).

What due diligence applies to Iraq?

Enhanced due diligence. This is decision-support based on Iraq's FATF grey list status, governance and sanctions signals, and is not a substitute for a firm's own risk assessment.

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)