IRAQI BANKING LAWS LIBRARY

[Carrello]

A few have requested a spot to keep Iraqi banking laws, and explicit and applicable banking news, all in one spot for easy access. Here it is!

Please post only information that applies. We will be using this as a library for current issues, and a reference library for the future. This will help us to understand the current situation, and also assist investors with questions moving forward after the RV (that would be Jan 1, 2012).

We all appreciate the adherence to keeping this thread for Iraqi banking laws only. Thank you.

[yota691]

Cool taking care of DV folks

[eightball]

Nice!

[Stryker365]

Here is my contribution to this thread. I have read these documents and feel these are key to our investment. I feel there is a lot of information here to help understand some of the World Bank Laws and how they relate to Iraq. A few weeks ago I posted a list and review - this list has basically said Iraq is on par with expectations, most of what they needed to do was in progress or completed and I believe this document was published in the first half of the year. I will try and find it and post it again.

BANKING SUPERVISION AND REGULATIONS

http://siteresources.worldbank.org/INTMENA/Resources/Financial_Sector_Review_English.pdf

Financial Sector Review of Iraq

http://siteresources.worldbank.org/INTMENA/Resources/Financial_Sector_Review_English.pdf

I went ahead and moved these over from the other thread

Edited December 17, 2011 by Stryker365

[Maggie123]

This is great! I am sure this will build into a valuable resource for all of us!

Thank You Carrello and Stryker, you two are awesome!

[DinarDana]

Here is my contribution to this thread. I have read these documents and feel these are key to our investment. I feel there is a lot of information here to help understand some of the World Bank Laws and how they relate to Iraq. A few weeks ago I posted a list and review - this list has basically said Iraq is on par with expectations, most of what they needed to do was in progress or completed and I believe this document was published in the first half of the year. I will try and find it and post it again.

BANKING SUPERVISION AND REGULATIONS

http://siteresources...iew_English.pdf

Financial Sector Review of Iraq

http://siteresources...iew_English.pdf

I went ahead and moved these over from the other thread

Thanks for moving this over for me, you are so nice! I agree it is quite difficult to follow. I stepped out to buy an early Christmas gift (Neat Desk)*. I highly recommend this product once the dinar RV's. This is a scanner and digital filing system. If you plan to hold on to your wealth, provided we do become wealthy, we will need a way to keep track of all important papers. To be a good investor and money manager you need to take on the process of organization. You have to think like the IRS, a banker, business owner, investor and money manager. I will consult with a private banker, however I will manage as much as I ca because I want this to become my four hour work week.

I have much more to add. Banking and the CBI monetary policies is what I seem to like to study and I have a lot of information to share. Much of it requires a lot of extra brain function because the information is very dense. I will post later this evening with more links. See you all later! Thanks Carrello, Yota, Stryker, Eightball and Maggie.

[DinarDana]

I will post later this evening with more links. See you all later! Thanks Carrello, Yota, Stryker, Eightball and Maggie.

This is a very interesting and important document and I highly recommend reading this. This will give us a good picture of the CBI banking framework, what has been completed and what is still not fully completed. I have read this document several times and each time I read articles posted by the CBI I understand where the information is coming from (this document). I have noticed that as they reach a milestone they send out a press release. With the help of members who are interested it would be nice to break out some of the information and discuss it in increments rather than the document in its entirety. So have fun reading....

http://www.imf.org/e...2011/cr1175.pdf

What is of special interest to me is page 38-39

Progress has been made in moving toward accepting the obligations of

Article VIII, Sections 2(a), 3, and 4, of the IMF’s Articles of Agreement

We have worked with IMF staff to complete the review of exchange laws and regulations and are considering measures to remove the identified exchange restrictions on current international transactions. We remain committed to avoid imposing any restrictions on the making of payments and transfers for current international transactions or introducing any multiple currency practices.

uh oh - it is real late or real early here on the East Coast - gotta sleep.

[DinarDana]

Liquidity Forecasting Frameworks

Liquidity forecasting enables the central bank to decide on how much liquidity to provide to or withdraw from

the market with the objective of smoothing undesirable fluctuations that could distort the implementation of

monetary policy and result in excessive market volatility.

It involves the centralization of a wide range of information on financial transactions which affect the main items of the central bank’s balance sheet,

including the sources of base money creation which are not under the control of the central bank (autonomous factors), and those which are under its direct control (policy position). The supply of bank reserves can be derived as:

Supply of bank reserves = Net foreign assets (changes)

+ Net position of the government

+ Other items net

– Currency in circulation

+ Lending to banks

The autonomous factors are beyond the control of the central bank in the very short run or—more

generally—not related to monetary policy actions. When the central bank act as a banker to the government,

the ability of the government to prepare accurate cash-flow projections and share them with the central bank

is vital since variations in the net position of the government often account for the most significant changes

in liquidity supply. In contrast, the “policy position” comprises central bank lending to banks through a

standing facility, and net lending through discretionary money market operations.

_______

Source: IMF (2000).

[Stryker365]

DinarDana,

Here is the link to the website for the Republic if Iraq National Investment Commission

http://www.investpromo.gov.iq/

Also some great reading from the site here;

I believe this is about to go international with an international currency...JMO...enjoy..

Welcome

Dear Investors:

Welcome to Iraq

We have embarked on a mission of rebuilding Iraq by attracting Iraqi, Arab, and foreign capital investment. Such investment will contribute to the transfer of knowledge and technology in all Iraqi economic sectors currently being transformed from centralized economy to a market economy based on free competition, equal opportunity and the development of the private sector. The year 2011 had witnessed receiving many official delegations, businessmen and international companies and holding various forums with signing several agreements that facilitate the smooth entrance of investors into Iraq and guaranty them lots of privileges and incentives according to investment Law 13 of 2006:

- The One Stop Shop in the National and Provincial Investment Commissions which facilitate the processing of the investment licenses applications, issuing the license, allocating the land, securing tax exemptions, and facilitating the entry and exit of investors and their employees.

- Providing potential investors with the updated Investment Map which lists the investment opportunities with a geographic description at the different provinces as well as a product and service sectoral description.

- The Investor Guide, which provides the necessary information to facilitate entry and exit procedures to and from Iraq and how to enjoy the many benefits of the investment law.

- Amendment of Investment Law 13 of 2006 which guarantees the ownership of land by local, Arab and foreign investors for housing projects based on law No. 2 of 2010 and the amendment of the Statute (7) which organizes the lease rates for lands invested in the various fields.

We are happy to address any questions, concerns, or suggestions you may have. Please email us or visit our headquarters in Baghdad. We are committed to providing all necessary services to achieve a mutually beneficial relationship.

Dr. Sami Al Araji

Chairman

National Investment Commission

Baghdad- Iraq

[Dinar_o'saurs]

Here's the English version of Stryker365's post.

http://www.investpromo.gov.iq/index.php?id=16

[Bristin]

I don’t post much, but the Warka discussion can benefit from an understanding of the Iraq Banking Law.

http://www.cbi.iq/documents/banking_law_f.pdf

I am not worried about Warka and believe that CBI stepping in is a good thing. The Banking Law governs the operation of banks in Iraq and is largely left to CBI to enforce. In my opinion, it provides nearly as much protection, and perhaps more, than the FDIC provides to U.S. bank depositors.

My opinion is not based on gut, instinct, or how I wish it to be. It is based on my reading of what I believe is factual information and common sense. So long as CBI enforces the law, Warka depositors are no more at risk of losing their investment than holders of physical currency.

In summary, one of the objectives of the Banking Law is to protect depositors. The law also allows a “block” to be placed on account withdrawals for up to 3 months or limit withdrawals to 5 million dinar if required to protect the financial condition of the bank.

The law allows CBI to “rehabilitate” a bank through bridge loans and forced sales of assets.

The law also states that in case of bankruptcy, depositors have priority and are protected up to 5 million dinar.

While everyone is encouraged to read the law for themselves, the following is my summaries of what I believe are the relevant sections of the law.

Article 2 – Regulatory Objectives

“The primary regulatory objective of this Law is to maintain confidence in the banking system. Other regulatory objectives include those of promoting public understanding of the banking system by providing appropriate information, MAINTAINING AN APPROPRIATE DEGREE OF PROTECTION FOR DEPOSITORS, and helping to reduce financial crime, including fraud, money-laundering and terrorist financing. [Emphasis Mine]

Article 4 – Licensing and Permits

Every bank in Iraq requires a license from CBI. Warka is licensed by CBI. Check the list of licensed banks on the CBI website.

The license is what gives CBI regulatory control over them.

Article 12 – Voluntary Termination of Operations

“1. No bank may terminate its operations without first obtaining the CBI’s prior approval to do so. A bank may be liquidated at the decision of its owners after the voluntary termination of its operations has been approved by the CBI and a written request for the revocation of the license or permit has been submitted to the CBI.”

“2. The revocation shall not be granted unless the CBI determines that the bank has fulfilled, or settled in a manner acceptable to the CBI, ALL OF THE BANK’S OBLIGATIONS TO ITS DEPOSITORS AND OTHER CREDITORS, CUSTOMERS, AND EMPLOYEES.” [Emphasis Mine]

So in other words, Warka can’t decide to cease operations and leave us high and dry without CBI approval.

Article 14 – Minimum Capital of Domestic Banks

The CBI sets the minimum capital that a bank must have.

Articles 59 – 66 deal with “Conservatorship.” When news articles speak of “guardianship”, I believe conservatorship is what they are referring too.

Article 59 – Grounds for Appointment of Conservator

CBI SHALL (meaning must by law) appoint a conservator when the bank fails to pay its financial obligations to depositors or when the capital is less than 50 percent of the required minimum.

CBI MAY (meaning within CBI’s discretion) appoint a conservator when a bank (a) does not carry out an order of CBI, ( the bank’s capital is let than 75 percent of required minimum or © there is evidence of criminal activity

It appears that it is the capital requirement that triggered CBI intervention into Warka.

Article 61 – Effects of the Appointment of A Conservator

Appointment of a conservator takes effect immediately.

The conservator takes over complete control of the bank including “sale and disposition of assets and such other actions as may be necessary to place the bank in a safe and solvent condition…”

The conservator is accountable only to the CBI.

Appointment of a conservator can be challenged by a bank but the appointment remains in effect until it is reversed.

Article 65 - Moratorium

“If required to protect the financial condition of a bank for which a conservator has been appointed, the CBI may at any time declare deposits and investments by the public in the bank, other than deposits and investments in segregated fiduciary accounts, to be totally or partially blocked for a maximum period of three months, provided that measures are taken which, in the opinion of the CBI, will preserve the approximate value of these deposits and investments together with interest accrued before and during the moratorium. In extraordinary cases, the conservator, with the approval of the CBI, may at any time permit the withdrawal of some or all of the deposits held in the name of a natural person not to exceed 5 million dinars for each such case.”

Article 68 – Voluntary Liquidation

A bank may voluntarily liquidate after approval to do so by the CBI. But it must be done in accordance with Article 12. Article 12 requires that the bank “has fulfilled, or settled in a manner acceptable to the CBI, all of the bank’s obligations to its depositors and other creditors, customers, and employees.”

Article 67 – Rehabilitation Procedures

Provides that if the Minister of Finance, upon the recommendation of CBI, determines that the stability of the banking system of Iraq requires the rehabilitation of the bank the CBI can do. This includes transferring the core business of the bank to another bank and making bridge loans capitalized by the state of Iraq.

Article 92 – Priority of Payment

In the case of bankruptcy, depositors have first priority to be paid. However, depositor claims that are not in the form of debt securities are limited to a maximum amount of 5 million dinars per depositor.