Iraq corporate bank accounts in 2024

Since 2003, Healy Consultants Group helps multi-national Clients open multi-currency corporate bank accounts in Iraq for local and overseas companies.

Our Dubai-based team will project manage the multi-currency corporate bank account opening process, including preparing a quality business plan for our Client’s business. In most cases, our Client will not need to travel to Iraq to complete bank account opening.

We recommend our multi-national Clients read this web page to avoid bank surprises later!

  • Iraq banking problems and solutions

    No Iraq banking problem Solution
    1.

    Bank insists the signatory to travel to Iraq for a one-hour bank interview.

    Healy Consultants Group’s Client travel policy will apply. Our staff will organise the bank meeting in our Iraq affiliate’s office and assist our Client during the bank interview(s).

    Alternatively, where possible, Healy Consultants Group’s banking team negotiates with the Iraqi bank to have our Client visit the bank’s international branch in their country of residence.

    2.

    Iraq corporate bank account opening for a newly-registered company is difficult when shareholders, directors and bank signatories live outside Iraq. Global banks continue to tighten corporate bank account opening procedures and their internal compliance departments are completing more thorough due diligence of Clients. Consequently, our Clients should expect Iraq bank account approval to take up to four weeks.

    Healy Consultants Group will prepare a quality business plan for the bank to increase the likelihood of account approval. If our Client requires a bank account at short notice, we recommend an immediate Iraq solution plus already-approved international corporate bank account.

    3.

    Like most international banks, Iraqi banks often close corporate bank accounts without giving an open, transparent reason to their customers. To close a bank account without giving the bank signatory an opportunity to explain ‘unusual transactions in the account’ is unfair and unreasonable and places our multi-national Clients’ businesses under stress.

    We recommend our multi-national Clients open multiple multi-currency corporate bank accounts for their entity. It is unwise to open one corporate bank account and have their business be dependent on one bank.

  • The Iraq banking sector

    Healy Consultants Group summary view:

    Iraq is unstable and we recommend our Clients minimise the funds they deposit in Iraqi banks. For example:

    • The banking and financial system is volatile, poorly regulated and corrupt. The Central Bank, also known as Central Bank of Iraq, along with 13 private banks, were being investigated for alleged involvement in money laundering and terror financing in late 2020.
    • The Iraqi government is effectively bankrupt. Years of civil war, crumbling infrastructure, outflows of funds away from Iraq, low oil prices and Covid-19 have drained state coffers. In December 2020, the Central Bank was forced to devalue the Iraqi Dinar by 20% against the dollar. Because oil exports contribute to 90% of state revenues, the country had to borrow from the Central Bank dollar reserves to pay government workers and pensions in 2021.
    • The government borrows heavily from Iraqi banks. While deposits in state banks are, in theory, protected by the government, if a bank was to fail, in practice because it depends on the banks itself, the Iraqi government is unable to prevent an Iraqi bank from collapsing and depositors would lose their money. There is a prevailing fear in Iraq that banks could collapse at any time.
    • Because Iraqi banks are distrusted, most businesses and individuals do not deposit money in banks. Instead, they use cash for day-to-day transactions. Less than a fifth of the population has a bank account. Some Iraqis deposit their money in Turkey or Iran instead. A large shadow economy operates in Iraq.
    • Because of the above constraints, getting credit from an Iraqi bank is notoriously difficult. Just 5% of Small to Medium Enterprises (SMEs) are estimated to secure loans from Iraqi banks. Most entrepreneurs borrow from family or friends, or use their own cash hordes.
    • To encourage more people and businesses to use bank accounts, at the end of 2020, some local banks increased deposit rates. Rasheed Bank, a leading state-run institution, pays 7% on fixed deposits for 2.5 years.
    • Because of Iraq’s poor reputation and dilapidated banking system, your Clients and suppliers may be uncomfortable making payments to, or receiving funds from, an Iraqi bank account.
    • Standard & Poor’s (S&P) sovereign credit rating for Iraq is B- with a stable outlook. Moody’s is Caa1 with a stable outlook. Fitch’s rating is B- with a stable outlook. See more data on Iraq here.
  • Key information on the Iraq banking sector

    • The Central Bank of Iraq licences and regulates 54 banks in Iraq including i) seven state-owned banks, ii) 15 foreign banks and iii) 11 Islamic banks. The seven state-owned banks control 96% of all assets and receive 89% of all deposits made in Iraq.
    • The over-reliance on state banks is because their deposits are, in theory, guaranteed by the government in the event of a run on the bank. In practice, the perilous state of government finances means this is only of minimal comfort to depositors. Local private banks are not covered in the same way. If our multinational Clients must hold funds in Iraq, do so only with a state-run bank such as Ziraat Bank or Vakif Bank.
    • Private banks are generally subject to greater restrictions and regulations than state banks. For example, they have a high capital adequacy requirement. Some Iraqi private banks are well capitalised and liquid. Where many Middle East private banks’ cash-to-total liabilities ratios range from 14% and 50%, premium Iraqi private banks’ ratios range from 60% and 90%.
    • On average, Healy Consultants Group’s team can secure Iraqi account numbers and online banking login details for our Client within four weeks.
    • Iraq has an undeveloped banking network. Branches and ATMs are few and far between, and those that exist keep irregular hours. ATMs are often out of order, or quickly run out of cash, and even if they are in service, will normally not accept foreign bank cards. Banking in Iraq is frustrating.
    • Contactless payments are almost unheard of in Iraq. The country lacks digital payment systems infrastructure. That said, we expect there to be a rapid shift to digital banking in Iraq because i) the poor security situation means visiting a branch is risky, ii) it is currently necessary to carry large amounts of cash, even for sizeable transactions, which is dangerous and iii) more than 70% of Iraqis own a smartphone, so mobile banking should be a natural evolution.
    • Products and services offered by banks in Iraq are a far cry from what a multinational Client would expect in other countries. For example, debit and credit cards are not issued as a standard procedure. Internet banking is rudimentary at best. Customer service is also poor.
    • Multi-currency accounts are still rare in Iraq. It is likely our Client will have to open separate IQD and US dollar accounts if they wish to have the flexibility to make and receive local and international payments respectively.
    • Our Clients can conduct spot transactions in any currency of their choice. However, forward speculation with regards to the Iraqi Dinar currency is not permitted in Iraq.
    • Iraq is not a signatory to the Common Reporting Standard (CRS) initiative to clamp down on tax evasion. As a result, Iraqi banks are not required to share information on accounts and account holders with tax authorities where the company or individual is a tax-resident.
    • However Iraq is a signatory to the Foreign Account Tax Compliance Act (FATCA), whereby the Iraqi authorities pass information of US citizen account holders to the US Inland Revenue Service (IRS).
  • Foreign exchange obligations in Iraq

    The Iraqi government imposes some foreign exchange controls. While there are no restrictions on exchanging Iraqi Dinars for foreign currencies, the Central Bank requires companies to:

    • Show invoices as proof of transaction if they purchase foreign currency to complete transactions with non-Iraqi entities through their bank.
    • Obtain a tax clearance certificate from the General Commission for Taxes if converting IQD15 million (US$10,300) or more into foreign currency.
    • Obtain Central Bank’s permission to take bank notes exceeding US$10,000 in value out of the country.

    It is important that our Clients are aware of the foreign exchange restrictions and their obligations in Iraq. Let us know if you require Healy Consultant Group PLC’s assistance to timely and efficiently complete your responsibilities.

  • Healy Consultants Group fees to help open a corporate bank account in Iraq

    We guarantee Iraq corporate bank account approval for our Clients.

    Iraq banking task Our Client travels US$
    Iraq bank account for a foreign company No 5,950
    Iraq bank account for a Iraqi company No 4,950
    Iraqi personal bank account No 4,950

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Conclusion

Iraqi corporate bank account opening is straightforward if you know how. Contact Healy Consultants Group if your firm needs assistance navigating through the different banking solutions.

Contact us

For additional information on our banking services in Iraq, please contact our in-house country expert, Mr. Seth Ochieng, directly:
Director of Client Engagements - Seth
  • Mr. Seth Ochieng
  • Director of Client Engagements
  • Contact me!
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