Navigating Iraq’s New Import Landscape: Understanding the CBI’s Prior Declaration System

Big changes are coming to how Iraqi importers access foreign currency for their goods. Starting December 1, 2025, for specific high-value items like gold, mobile devices, and vehicles, and expanding to all other goods by January 1, 2026, the Central Bank of Iraq (CBI) is implementing a mandatory Prior Declaration System for all imported goods tied to financial transfers.

This isn’t just another bureaucratic hurdle; it’s a fundamental shift aimed at tackling significant challenges, modernising trade finance, and bringing much-needed transparency to Iraq’s economy.

Why the Change? The Driving Forces Behind the New System

For years, a significant gap existed between the foreign currency released by the CBI for imports and the actual value of goods recorded by Customs. This discrepancy opened doors to several problems:

1. Combating Fraud and Illicit Transfers: Inflated or fake invoices allowed some to siphon off billions in foreign currency under the guise of legitimate imports. The new system aims to shut down this illicit dollar leakage.
2. Enhancing Financial Transparency: By digitally linking financial transactions to physical goods, the CBI is improving its compliance with international anti-money laundering (AML) and counter-terrorism financing (CFT) standards. This is crucial for Iraqi banks to maintain their relationships with global financial institutions.
3. Boosting Customs Revenue: More accurate and verifiable declarations mean the Customs Authority can better assess and collect duties, contributing more effectively to state revenue.
4. Modernizing Trade: The move towards digital, integrated processes pushes Iraq’s financial and trade systems closer to global best practices.

How Does the New Prior Declaration System Work? (A Step-by-Step Guide)

This system fundamentally reverses the order of operations: verification now happens before the money moves.

Step 1: The Pre-Declaration – Engaging Customs First

• Your Action: Before you even think about transferring money, you (the importer) must submit a comprehensive Pre-Customs Declaration through the Customs Authority’s digital platform (often ASYCUDA World).
• What to Include: This declaration is your promise of what you intend to import. You’ll detail the goods’ Harmonized System (HS) Codes, precise description, quantity, unit price, total value (based on your PO/PI), country of origin, and brand.
• The Output: Once reviewed and approved, Customs will issue a unique digital identifier for this intended import. This is your golden ticket for the next step.

Step 2: Financial Transfer Request – Linking Trade to Finance

• Your Action: With your Customs identifier in hand, you approach your commercial bank in Iraq to request the purchase of foreign currency (e.g., US Dollars) from the CBI’s window to pay your international supplier.
• The Documentation: You will present your bank with your proforma invoice or purchase order, and crucially, that unique digital identifier from your Pre-Customs Declaration.

Step 3: CBI Verification – The Digital Cross-Check

• The Bank’s Role: Your bank transmits your foreign currency request, along with the customs identifier, to the Central Bank of Iraq.
• The CBI’s Role: The CBI’s system automatically performs a crucial digital cross-check. It compares the dollar amount you’re requesting against the pre-declared value of the goods stored in the Customs system using that unique identifier.
  • Approved: If the amounts match, the CBI greenlights the foreign currency transfer to your supplier’s bank.
  • Flagged/Denied: If there’s no matching declaration, or a significant discrepancy suggesting fraud, the request will be denied.

Step 4: Goods Arrival & Final Clearance – Physical Verification

• The Last Check: When your goods physically arrive at the Iraqi border, Customs uses the same unique digital identifier to access your original pre-declaration. This allows them to verify that the goods entering the country precisely match what was declared and what was paid for with CBI-approved foreign currency.

Handling Real-World Scenarios: Advance Payments & Multiple Shipments

The CBI recognizes that trade isn’t always linear. Here’s how common scenarios are handled:

• Advance Payments & Estimated Quantities: If you make an advance payment based on an estimated quantity (under a Purchase Order/Proforma Invoice), you’ll declare the estimated maximum value to Customs for that initial transfer.
  • If Final Value is LESS: You will be required to repatriate (return) the excess foreign currency to your Iraqi bank. Failure to do so can result in significant fines and blacklisting from future CBI FX access.
  • If Final Value is MORE: You can apply for a second, justified foreign currency transfer to cover the remaining balance, supported by the final Customs Declaration showing the higher actual import value.
• Multiple/Installment Shipments under One PO/PI:
  • Your initial application to the bank, supported by your Master PO/PI, establishes the total financial commitment for the contract.
  • For each individual shipment, you’ll submit a new, specific Pre-Customs Declaration detailing that particular installment’s value. The CBI’s system will track cumulative payments against cumulative goods received, ensuring a precise match over the life of the contract.

What Importers Need to Do Now

This new system demands precision, meticulous documentation, and close coordination with your bank and customs broker.

1. Embrace Digital: Get familiar with the Customs Authority’s electronic declaration platform.
2. Accuracy is Key: Ensure your Purchase Orders, Proforma Invoices, and Customs Declarations are perfectly aligned in value, quantity, and description.
3. Communication with Banks: Work closely with your commercial bank to understand their specific procedures and requirements for linking your declarations to your financial transfers.
4. Plan for Reconciliation: Be prepared to either repatriate excess funds or justify additional transfers for any discrepancies at the end of a contract.

The CBI’s Prior Declaration System is a significant step towards a more transparent, efficient, and compliant Iraqi trade finance environment. While it introduces new requirements, its long-term benefits in combating illicit activities and stabilising the economy are substantial. By understanding and adapting to these changes, Iraqi importers can continue to thrive in this evolving landscape.