Iraqi PM Hails Banking Reform Deal with U.S. Treasury as Major Step Towards Global Integration

Iraqi PM's Media Office

Iraqi Prime Minister Ali al-Zaidi.

Iraqi Prime Minister Ali al-Zaidi has welcomed the recent agreements between the Central Bank of Iraq and the U.S. Treasury Department, describing them as a significant milestone in reforming the country's banking sector and deepening its integration into the global financial system.

In a post on X, al-Zaidi said the qualification of seven Iraqi banks to rejoin international correspondent banking networks represented a major achievement for Iraq's financial reform programme.

He noted that the move will allow the banks to resume transactions in other foreign currencies before ultimately regaining full eligibility to conduct business in U.S. dollars, once they have met all required compliance and governance standards.

According to the Prime Minister, the development demonstrates the success of the Iraqi government's financial reform strategy and its efforts to modernise the country's banking sector in line with international standards.

Al-Zaidi said the agreements would strengthen confidence in Iraq's domestic banking system while creating broader opportunities to support economic growth and attract foreign investment.

He reaffirmed the government's commitment to advancing financial and banking reforms, emphasising the importance of transparency, good governance and regulatory compliance in safeguarding Iraq's interests and enhancing its economic standing at both the regional and international levels.

Regarding the matter, the Under Secretary for Terrorism and Financial Intelligence at the U.S. Treasury Department said in a statement on X: "This week, Treasury led a series of high-level meetings with the Governor of the Central Bank of Iraq.  During these meetings, Treasury affirmed that Iraqi banks may be reintegrated into non-U.S. dollar correspondent banking channels after the first phase of the Central Bank of Iraq’s bank reform process, provided these banks meet required compliance and governance standards.  The first phase of the bank reform process is scheduled to conclude this summer. Currently, no banned banks have regained access to foreign currency transactions."
 
The statement added: "Banks that successfully complete the entire bank reform and relicensing process – including by undertaking a satisfactory third-party audit of their compliance function, securing a qualified institutional investor, and meeting international fit and proper standards – will also be eligible to conduct U.S. dollar transactions at the conclusion of the process.  All banks authorized to transact in international currencies will have the opportunity to establish correspondent banking relationships with international financial institutions."
 
The statement said: "The bank reform and relicensing initiative forms part of the Central Bank of Iraq’s broader strategy to modernize and strengthen the Iraqi banking sector.  Treasury supports the efforts of the Central Bank of Iraq to bring greater transparency and integrity to the Iraqi banking sector, including a focus on eliminating money laundering and illicit finance activity. The United States will not tolerate the abuse of Iraqi banks by Iran-aligned militia groups and will take independent action, if necessary, to target such activity." 


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