The Financial Action Task Force’s decision on June 19 to place Iraq back on its grey list marks a significant setback for Baghdad’s efforts to modernize its financial system and strengthen confidence in the country’s regulatory environment.

The move does not amount to sanctions, nor does it cut Iraq off from the international financial system, but it does place the country under increased monitoring and signals that Iraq must demonstrate tangible progress in addressing weaknesses in its anti-money laundering and counter-terrorist financing framework.

FATF’s official statement was not entirely negative. It noted that Iraq had made a high-level political commitment to work with FATF and its MENA subsidiary to strengthen the effectiveness of its AML/CFT regime. It also acknowledged that, since the adoption of Iraq’s Mutual Evaluation Report in November 2024, the country had made progress on several recommended actions. These included applying market entry controls to prevent criminals and terrorists from accessing important sectors, providing guidance and outreach to non-banking financial institutions, and introducing measures to mitigate risks in the real estate sector.

Iraq is therefore not being judged simply for failing to pass laws or issue regulations, but rather, FATF is focused on whether reforms are producing measurable outcomes. In this sense, Iraq’s grey-listing reflects a familiar problem in governance where there is a gap between formal reform measures and effective implementation.

The action plan agreed with FATF is extensive but can broadly be grouped into three areas: improving oversight of financial activity, strengthening transparency, and increasing enforcement. Iraq is expected to improve its understanding of money laundering and terrorist financing risks, strengthen oversight of informal money transfer networks, establish a regulatory framework for virtual assets, and ensure that banks and other high-risk sectors properly implement AML/CFT requirements.

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• US Special Envoy visits Iraq
• Iraq welcomes US-Iran MoU
• Challenges emerge over handover of Saraya Al-Salam
• Changes made to financial and security institutions
• Zaidi appoints new advisors
• Baghdad International Airport development contract terminated
• Iraq’s World Cup campaign begins

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The first significant test of the Zaidi government’s efforts to rein in paramilitary actors is unfolding in Samarra after Saraya al-Salam refused to comply with an order to change the leadership of the city’s operations command.

The dispute began when Hashd Commission chairman Falih Al-Fayyadh issued an order replacing the commander of Samarra Operations Command, Ali Al-Uqayli, with Yousef Mizyan. The move quickly escalated, prompting video statements from Saraya al-Salam members rejecting the decision and insisting that the group would remain in Samarra. Critics of the appointment claim that Mizyan is affiliated with Asaib Ahl al-Haq, a longstanding rival of the Sadrist movement.

In response, members of Saraya al-Salam reportedly deployed across several locations in Samarra and refused to facilitate the handover. The confrontation was particularly sensitive given Samarra’s unique status within the Sadrist movement. Unlike most other parts of Iraq, Saraya al-Salam has maintained a continuous security presence in and around the city since the rise of ISIS and the need to protect the Askari Shrine, one of the holiest sites in Shia Islam. Muqtada Al-Sadr had previously exempted Samarra from earlier freezes imposed on Saraya al-Salam activities, underscoring the city’s special significance in Sadrist security thinking.

Last month, Saraya al-Salam became the first major armed faction to formally begin the process of integration into the Hashd. In practical terms, this involves relinquishing control over its three brigades and adhering to the formal chain of command including the redeployment of its personnel to other parts of Iraq. Following Muqtada Al-Sadr’s announcement separating the group from his Shia National Movement, a government committee headed by Deputy Joint Operations Commander Qais Al-Mohammadawi oversaw the handover of Saraya al-Salam headquarters, weapons, and facilities in Samarra. During a ceremony attended by senior military officials, the group’s flag was lowered and formally transferred to the state, symbolizing the first step in a broader integration process.

The dispute in Samarra therefore exposes underlying disagreements about the extent of that integration and how much control Saraya al-Salam is willing to relinquish over a city it considers strategically and symbolically important. More broadly, it raises questions about the extent to which the group is prepared to submit to the chain of command of the Hashd Commission, particularly if it believes rival factions are influencing key appointments or are themselves reluctant to undergo a similar integration process.

Tensions between Saraya al-Salam and Asaib Ahl al-Haq have deep roots dating back to the split of Qais Al-Khazali from the Sadrist movement and the Mahdi Army. The two groups have repeatedly clashed politically and, at times, militarily, particularly in Basra and Maysan. The perception that the new commander in Samarra is affiliated with Asaib transformed what might otherwise have been a routine personnel change into a symbol of competition over influence in one of Iraq’s most strategically and symbolically important cities.

Contradictory reports continue to emerge regarding the current status of the dispute. On one hand, sources close to Sadr’s inner circle have told reporters that he instructed Saraya al-Salam to comply with Fayyadh’s order and avoid confrontation. On the other hand, reports emerged that Prime Minister Zaidi had intervened to reinstate Uqayli as head of Samarra Operations Command. Adding further complexity, there are also reports that Sadr has dismissed Uqayli from Saraya al-Salam itself, suggesting that elements within the group may have acted counter to Sadr’s instructions.

While the immediate crisis appears to have been contained, the episode carries implications that extend far beyond Samarra. The dispute comes at a time when Zaidi’s government has placed the state’s monopoly on force at the center of its political program. Recent commitments by Saraya al-Salam, Asaib Ahl al-Haq, and Kataib Imam Ali to separate their armed wings from political organizations have been presented as evidence that Iraq may finally be moving towards restricting the possession of weapons to the state.

Yet the events in Samarra demonstrate how difficult this process is likely to be in practice. The challenge is no longer simply whether armed groups are willing to hand over weapons or integrate administratively into state institutions. Rather, it is whether longstanding networks of influence, local security arrangements, and factional rivalries can be subordinated to neutral state structures.

All of this comes ahead of Zaidi’s expected visit to Washington next month. With time running short, he faces pressure to demonstrate tangible progress in bringing armed groups under state control and advancing a credible pathway towards the demobilization and integration of Iraq’s paramilitary factions.

• Arrest warrants issued for Sudani associates

• Prime Minister announces trip to Washington

• Four presidencies meet

• Former Governor of Ninewa released from prison

• Head of INIS travels to Syria

• Mosul International Airport operations remain delayed

• Iraqi national team players detained for hours in Chicago

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Several arrest warrants have been issued and investigations launched against individuals associated with former Prime Minister Mohammed Al-Sudani, with many more expected to follow.

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• Grand Ayatollah Fayadh passes away

• Changes made within PMO

• ICAA head reappointed

• US Special Envoy to Iraq appointed

• More armed groups announce disarmament

• Bahrain bars citizens from traveling to Iraq

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Grand Ayatollah Muhammad Ishaq Al-Fayadh passed away today in a hospital in Baghdad. The late cleric was 95-years old and had been in and out of hospitals for the past year and a half, due to various health issues. He was one of the four prominent Grand Ayatollahs of Najaf alongside Grand Ayatollah Ali Al-Sistani, Grand Ayatollah Muhammad Saeed Al-Hakim (who passed away in 2021), and Grand Ayatollah Bashir Al-Najafi. With the passing of Fayadh, the generation of leading clerics in Najaf shrinks, impacting the succession process in the most prominent religious seminary in the Shia world.

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• Sadr calls for integration of Saraya Al-Salam

• KRG Prime Minister visits Baghdad

• Kadhimi visits Erbil

• Iraqi FA elects new president

• Iran invites President Amedi to Tehran

• Iraq condemns attack on Kuwait

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The leader of the Shia National Movement, Muqtada Al-Sadr, released a statement on May 27 claiming that his militia, Saraya Al-Salam (The Peace Brigades), will be completely separated from his political movement and fully integrated into the state. The statement was welcomed by Prime Minister Ali Al-Zaidi and other political leaders, but the lack of detail, as well as Sadr’s track record has raised questions about how genuine the decision really is.

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The Iraqi Football Association (FA) held its general conference at the Rashid Hotel in Baghdad on Saturday, where the general assembly voted on a new president, two deputies, and ten-member executive committee to serve for the next four years. This took place two days after the national team began their World Cup preparations in Spain.

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• Zaidi chairs first two cabinet meetings

• Zaidi meets with CBI governor

• Saudi denounces drone attacks from Iraqi territory

• Zaidi chairs first National Security Council meeting

• Petraeus visits Baghdad

• Babil governor hands in resignation

• Reconstruction and Development Coalition faces more schisms

• Kataib Hezbollah commander arrested

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Prime Minister Ali Al-Zaidi nears his first week in office, and with a partial cabinet, there are not only vacant ministries, but also continuity among other key figures from the previous administration, including the chief of staff, the secretary-general of the Council of Ministers (COMSEC), and the governor of the Central Bank of Iraq (CBI). In the coming weeks, it will become clearer who will maintain their positions and who will be replaced as Zaidi’s team adjusts to the Prime Minister’s Office.

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• Parliament approves Zaidi’s cabinet

• Zaidi reads out his ministerial curriculum

• Reconstruction and Development Coalition fractures

• Prime Minister receives congratulatory messages

• Iraq denies players being rejected from entering US for upcoming world cup

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Parliament is set to convene a session today to vote on Ali Al-Zaidi’s proposed cabinet. Zaidi is expected to submit a partial cabinet made up of 18 posts. Here’s the full list of names and their political affiliations:

Shia factions:

1- Minister of Oil: Basim Mohammed Khudair (RDC - Sudani)

Deputy Minister of Oil for Upstream and career engineer at the Mi…

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Parliament’s announcement that it will hold a session tomorrow to vote on Ali Al-Zaidi’s proposed government confirms that Iraq’s political blocs have finally reached an agreement on how to distribute cabinet posts after days of uncertainty and delays. Speculation had grown that the parliamentary session would not take place this week due to escalating …

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• Prime Minister-Designate drafts ministerial curriculum

• Prime Minister-Designate travels to Kurdistan Region

• Prime-Minister-Designate speaks with US Secretary of War

• Deputy Minister of Oil sanctioned

• US announces another reward program

• Sadr releases statement regarding government formation

• President meets with heads of missions

• Iraqi FA announces pre-world cup plan

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Prime Minister-Designate Ali Al-Zaidi met with Speaker Haybat Al-Halbusi on Thursday and presented him with his ministerial curriculum (al-minhaj al-wizari), which is a document that parliament must approve alongside the ministers in his cabinet as stipulated in Article 76 of the constitution. The ministerial curriculum sets out the government’s broad policy priorities and includes a number of key commitments that it is expected to fulfil.

A more comprehensive “government programme” (al-barnamij al-hukumi) will then be produced by the new government within the first couple of months that lays out a far more detailed plan on how the government intends to meet its policy commitments.

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A week has passed since Ali Al-Zaidi officially became prime minister-designate. This leaves him three weeks to put together a government and convince MPs to approve his proposed cabinet. A prime minister-designate does not need to fill all his ministries in order to become prime minister. Rather, just over half of the allotted cabinet seats must be filled in order for a prime minister to hold and pass votes in cabinet meetings.

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• Ali Al-Zaidi nominated as prime minister-designate

• Coordination Framework holds weekly meeting

• US President backs Zaidi’s nomination

• Kurdistan Region President travels to Abu Dhabi

• Muthana provincial council holds vote of no confidence for governor

• Iraq falls in press freedom index

• US announces another reward program

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The designation of Ali Al-Zaidi as prime minister marks a departure from established patterns of elite bargaining, but not from the underlying logic that governs them. While the choice initially appeared strange, particularly given Zaidi’s lack of formal political experience, it is better understood as a calculated outcome of converging interests within the Coordination Framework.

The decision was notable for the degree of consensus it generated. Zaidi secured the backing of nine of the twelve Coordination Framework figureheads. Only Haider Al-Abadi and Humam Hamoudi objected to the nomination, with Abu Alaa Al-Walai also withholding his support, possibly as a face-saving measure in light of recent US objections to his participation in the meetings. This suggests that Zaidi’s candidacy was not simply a fallback option, but one that had been discreetly socialized within elite networks prior to its public emergence.

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