New Regulation on Electronic Payment Services Enhances Financial Security in Iraq

New Regulation on Electronic Payment Services Enhances Financial Security in Iraq

The Iraqi Cabinet has issued a landmark regulatory update concerning electronic payment services, published in the Official Gazette on April 29, 2024, aimed at bolstering efficiency, security, and transparency within Iraq's financial sector. This new regulation replaces the 2014 framework and introduces significant changes. It defines electronic payment services to include various activities related to executing and managing legal and non-prohibited financial transactions through electronic means, such as fund transfers and electronic money payments, facilitated by advanced technological infrastructures. Entities seeking to offer these services must obtain a license from the Central Bank of Iraq, adhering to its standards and regulations. These licenses are valid for ten years and are renewable upon approval. The Central Bank holds exclusive authority over the regulation, registration, and licensing of third-party-operated electronic payment systems, as well as their compliance monitoring. The regulation mandates that service providers and the Central Bank maintain records of all transactions for at least five years, ensuring these records are available for inspection and audit. Additionally, service providers must provide financial guarantees or easily liquidatable assets for transaction settlements, ensuring financial stability. Non-compliance may result in penalties, including warnings, financial penalties, suspension, or license revocation. The Central Bank is also empowered to issue directives and guidelines for the regulation’s enforcement. Service providers must align their operations with the new regulation within six months of its enforcement. This comprehensive legal framework is anticipated to have a positive impact by safeguarding consumers and promoting financial system stability in Iraq, reflecting the country’s commitment to enhancing its financial sector through robust regulatory practices.