Baghdad: The Central Bank of Iraq announced on Saturday that it has reached an agreement with the US Treasury Department to reinstate restricted Iraqi banks to international correspondent banking channels not denominated in US dollars.

According to Iraqi News Agency, a statement from the Prime Minister's Media Office highlighted that "following the official visit of Prime Minister Ali Faleh al-Zaidi and his meeting with the President of the United States, and within the framework of ongoing efforts to strengthen bilateral relations between the two countries, the Governor of the Central Bank of Iraq held a series of high-level meetings with officials at the US Treasury."

The statement elaborated that "these meetings resulted in an agreement to reinstate restricted Iraqi banks to international correspondent banking channels not denominated in US dollars, after they meet the approved standards and requirements in the areas of compliance and governance, and complete the first phase of the banking sector reform and relicensing program implemented by the Central Bank of Iraq. Banks that successfully complete the reform and relicensing requirements will regain their eligibility to conduct transactions in US dollars upon completion of all related regulatory procedures and requirements."

The understanding is part of the Central Bank of Iraq's comprehensive strategy, which aims to modernize the banking sector, enhance its resilience, and improve its efficiency, capacity, and competitiveness. This strategy is seen as a crucial step toward fully integrating the Iraqi banking sector into the global financial system, strengthening confidence in the sector, and creating the necessary environment for its openness to international financial institutions.

The Central Bank of Iraq reiterated its commitment to ongoing comprehensive evaluations of all Iraqi banks and strengthening the oversight and supervisory system to ensure sustainable compliance with international standards, governance, risk management, and anti-money laundering and counter-terrorism financing requirements. The bank emphasized that it will continue to take appropriate supervisory and regulatory measures against any institution that does not meet these standards, including restricting or suspending its access to international financial channels or revoking its license, as necessary and in accordance with applicable legal and regulatory frameworks.