Iraq joins money-laundering watchlist

• FATF puts Iraq on ‘grey list’
• Kuwait remains under scrutiny
• Algeria’s progress recognised

The Financial Action Task Force (FATF) has added Iraq to its “grey list” of countries with perceived deficiencies in their anti-money-laundering and counterterrorism funding laws.

The Paris-based FATF, at its meeting on Friday, also decided to keep Kuwait on the list despite counter-laundering measures the country has taken over the past two years.

Algeria was removed from the list in recognition of regulations enacted in the past few years.

“Iraq has been added to the grey list as work is needed ‌to ⁠tackle risks related to cash, increase money-laundering and terrorist-financing investigations and enhance the use of financial information,” FATF president Elisa de Anda Madrazo said in a statement.

Two FATF public documents are issued three times a year: the “black” and “grey” lists, which identify jurisdictions with weak measures to combat money laundering and terrorist financing.

Since taking office in ⁠May, Iraqi prime minister Ali Al-Zaidi has said that rebuilding the economy, attracting foreign investment and fighting ⁠corruption will be central to his administration’s agenda.

In a surprise move at the weekend, Al-Zaidi removed central bank governor Ali Al-Allaq, who had served in his post since 2014, and replaced him with Nizar Hussein.

Hussein, a former lawyer, was head of the central bank’s anti-money-laundering and terror-funding unit and his appointment is seen as part of Al-Zaidi’s purge efforts.

“This move will send a positive signal to the West… I also believe the central bank will pursue its plan to overhaul the banking sector,” said Nabil Al-Marsoomi, an Iraqi university economics professor.

Iraq, Opec’s second-largest oil exporter, has embarked on a plan to restructure its ailing banking sector, which has suffered big losses due to bad loans and decades of corruption.

In September 2025, the official daily Alsabah said Iraq received over 2,700 reports on suspected money-laundering and terror-funding operations during the first half of 2025.

The reports followed the enforcement of tough measures to combat such activities under pressure from Iraq’s Western allies and international organisations.

Iraq’s first anti-laundering and terror-funding law was passed by parliament in 2015 following an increase in suspected financial operations in the Arab country.

Kuwait concerns remain

Kuwait remains on FATF’s grey list despite a series of tough regulations it has taken in the past two years to combat laundering and terror funding.

In November, the commerce and industry ministry said it had shut down nearly 73,700 companies that failed to disclose their real owners.

The Gulf country has stepped up its fight against laundering following Western criticism and recommendations by FATF.

Kuwait, which controls the world’s sixth-largest recoverable oil deposits, issued its first comprehensive anti-laundering and terror-funding law in 2013 following pressure from the US and other Western powers.

The law criminalised such offences and included heavy financial penalties and prison terms of up to 10 years.

“The measures taken by Kuwait in the past period are the most drastic in many years… I believe it is a matter of time before Kuwait is removed from the FATF grey list,” said Ali Al-Enzi, manager of Al-Manakh economic consulting centre in Kuwait.

FAFT, an intergovernmental organisation founded in 1989 on a G7 initiative to combat laundering, said it had decided to remove Algeria from the grey list after it made strides in risk-based supervision, beneficial ownership and targeted financial sanctions.

Key measures taken by Algeria include banning cash deposits in corporate bank accounts.

The country’s central bank issued a circular in December to lenders imposing restrictions on cash deposits into commercial and corporate accounts, making transfers, bank cards and cheques the only acceptable methods.

The decision aims to combat high financial risks and align banking practices with stringent anti-laundering and counterterrorism financing legislation, the central bank said on its website.

• Financial crime watchdog puts Kuwait on grey list
• Algeria tightens gold trade laws to combat money laundering
• Jewellers top culprits in Kuwait laundering crimes

Algeria, which was placed on FATF’s grey list in late 2024, said last year it was also tightening its rules governing the gold and jewellery trade.

Under the new rules, jewellery dealers must be “constantly vigilant” about customers, providing annual updates of their laundering and terror-financing risks, the official gazette said.

The law imposes a fundamental obligation to report “suspicious transactions” to Algeria’s Financial Intelligence Unit immediately, before or after any such deal.