Iraq, U.S. Reach Understanding to Reinstate Restricted Banks to International Banking Channels
Seven Iraqi banks qualify to resume non-dollar foreign correspondent banking as reforms and compliance efforts advance
ERBIL (Kurdistan24) — Iraq and the United States have reached a joint understanding to allow restricted Iraqi banks to gradually regain access to international correspondent banking channels, marking a significant step in Baghdad's efforts to reform its banking sector and reintegrate it into the global financial system.
The announcement came in a statement issued on Saturday by the Iraqi Prime Minister's Media Office following Prime Minister Ali Falih al-Zaidi's official visit to the United States and his meeting with U.S. President Donald Trump. As part of the visit, Nizar Nasser Hussein, the Governor of the Central Bank of Iraq, held a series of high-level meetings with officials from the U.S. Treasury Department.
According to the statement, the two sides agreed that Iraqi banks currently under restrictions will be allowed to reconnect to foreign correspondent banking channels for currencies other than the U.S. dollar, provided they meet internationally recognized standards for compliance and corporate governance.
The banks must also complete the first phase of the Central Bank of Iraq's banking sector reform and relicensing program before regaining access to those international channels.
The statement added that banks completing all required reform measures, compliance obligations, and regulatory procedures will later become eligible to conduct transactions in U.S. dollars.
The agreement forms part of the Central Bank of Iraq's broader strategy to modernize the country's banking sector, strengthen its resilience and competitiveness, and fully integrate Iraqi financial institutions into the global financial system.
The strategy also seeks to enhance confidence in Iraq's banking sector while creating the conditions necessary for broader engagement with international financial institutions.
The Central Bank reaffirmed its commitment to continuing comprehensive evaluations of all Iraqi banks while strengthening oversight and supervision to ensure sustained compliance with international standards on governance, risk management, anti-money laundering, and counter-terrorism financing.
It emphasized that appropriate regulatory and supervisory measures will continue to be taken against any institution that fails to meet these standards. Such measures may include restricting or suspending access to international financial channels or revoking banking licenses when necessary and in accordance with applicable laws and regulations.
The Governor of the Central Bank also revealed that seven Iraqi banks currently qualify to return to international correspondent banking channels for non-dollar transactions. These banks will become eligible to conduct U.S. dollar transactions after successfully completing additional compliance, governance, and regulatory requirements.