The Iraqi government has expressed its readiness to deepen cooperation with the Financial Action Task Force (FATF), as the United States reaffirmed its support for Baghdad’s efforts to reform its banking system and address deficiencies in financial oversight.

Iraq Commits to FATF Coordination

The U.S. Embassy in Baghdad said Iraq has agreed to engage in joint cooperation and coordination with the FATF to address strategic weaknesses in its financial and banking sector.

According to the embassy statement, the initiative aims to close regulatory gaps that have previously undermined confidence in Iraq’s banking system and limited its integration with the global financial network.

Officials say the cooperation is intended to strengthen compliance with international standards on anti-money laundering (AML) and counter-terrorism financing (CTF), while improving transparency in financial transactions.

U.S. Cites Reform Momentum and Political Will

The U.S. Embassy noted that Iraq’s decision to work with international financial institutions reflects what it described as growing political will in Baghdad to align with global regulatory frameworks.

Over the past several years, the U.S. Department of the Treasury has imposed sanctions on more than 30 Iraqi private banks, restricting their access to U.S. dollar transactions over concerns related to money laundering and compliance violations.

Washington says the latest steps toward cooperation signal progress in addressing longstanding vulnerabilities in the financial sector and strengthening oversight mechanisms.

Efforts to Avoid Heightened International Scrutiny

The United States has also expressed support for accelerating the implementation of Iraq’s joint action plan with the FATF, warning that failure to meet international standards could expose Iraqi financial institutions to further restrictions.

Officials in Washington say improved compliance is essential to preventing Iraqi banks from facing increased international scrutiny or potential designation under higher-risk categories, which could further limit access to global financial markets.

Enhanced cooperation, they added, would help restore confidence among international correspondent banks and encourage foreign investment.

FATF Role and Iraq’s Reform Path

The Financial Action Task Force, established in 1989, is a global standard-setting body tasked with combating money laundering, terrorist financing, and other threats to the integrity of the international financial system.

Membership compliance requires countries to implement strict regulatory frameworks and demonstrate effective enforcement mechanisms.

Iraq’s alignment with FATF standards is widely viewed by international partners as a key step toward strengthening financial stability, improving investor confidence, and integrating the country more fully into the global banking system.