Legal Regulation of Liability Arising from Banking Mistake

Abstract

The world has witnessed radical transformations in the past two decades that have profoundly affected various vital sectors. However, the banking industry remains an essential element in enhancing economic stability and supporting development in any country.

In this context, countries such as Iraq face major challenges related to building confidence in the banking system, which requires the development of appropriate legislation that ensures the protection of all stakeholders, in addition to improving the efficiency of regulation and effective risk management. It is clear that achieving an effective balance in the performance of banks requires the existence of a legal framework that defines responsibilities accurately and clearly.

There is no doubt that the issue of due diligence in banking institutions is a dynamic and changing issue, as mistakes made can lead to different levels of legal liability, which may negatively affect the obligations of other parties involved in the banking system. As a bank is a legal entity, it is liable for any failure, whether in implementing contractual obligations or legal and professional obligations, which makes risk management.