First Iraqi Bank Champions a New Era of Compliance With Groundbreaking AML/CFT Training Initiative

In a bold move that positions it as a leader in regional financial reform, First Iraqi Bank (FIB) has launched an ambitious and comprehensive training initiative aimed at transforming how financial institutions in Iraq tackle money laundering and terrorist financing.

Developed in partnership with the Institute for Financial Integrity (IFI) and backed by the Central Bank of Iraq (CBI) and compliance advisory firm K2 Integrity, the program represents a watershed moment for Iraq’s efforts to restore confidence in its banking system.

A Turning Point for Iraq’s Financial Integrity

Iraq has long wrestled with the legacy of instability, outdated systems, and limited access to global compliance tools. These factors once hindered the country's ability to screen, monitor, and report suspicious financial activity, particularly in cross-border payments. But as Iraq's banking sector modernizes—especially following the 2017 enforcement of Law No. 39 of 2015, Iraq’s cornerstone anti-money laundering (AML) and counter-terrorism financing (CFT) legislation—FIB is stepping up to raise the bar.

This training effort is not a routine compliance refresh. As one senior compliance official involved in the rollout noted, “This move is more than a local training update; it marks a substantial investment in the integrity and reputation of Iraq’s financial system.” It targets both the legal minimum and the international benchmarks outlined by the Financial Action Task Force (FATF), including the FATF’s 40 Recommendations.

Why Cross-Border Compliance Is Central to the Mission

The increase in Iraq’s cross-border financial activity has created new compliance challenges. With the financial sector opening up, illicit flows pose heightened risks to both national security and Iraq’s fragile global reputation. “The complexity of global payment chains increases the risk of funds being diverted to criminal enterprises or terrorist organizations,” noted an AML trainer from IFI.

To address this, the training zeroes in on practical tools such as customer due diligence (CDD), detection of beneficial ownership structures, and suspicious transaction reporting. Real-world applications are front and center—ranging from how to identify red flags to advanced modules on correspondent banking relationships and enhanced due diligence for high-risk entities.

The curriculum reflects Iraq’s regulatory obligations under CBI AML/CFT Regulations (2018) and Instruction No. 9/1/352 (2019), which require rigorous monitoring of high-value transactions, large cash movements, and politically exposed persons (PEPs). The bank also trains staff on international frameworks like UN Security Council Resolutions 1267 and 1373, particularly relating to sanctions and asset freezes.

Building a Culture, Not Just Compliance Checklists

What sets this program apart is its emphasis on long-term cultural change. The IFI’s approach is rooted in the idea that effective compliance must go beyond policies—it must be embedded in an institution’s DNA. "The program is not just about policies and procedures, but about empowering employees to understand the ‘why’ behind regulations and their direct impact on financial crime prevention,” said an IFI instructor.

The training uses a blended learning model, combining Arabic-language eLearning modules with live, scenario-driven workshops. Employees are guided through real-world case studies involving complex cross-border transactions, structured cash deposits, and typologies for trade-based money laundering—one of the biggest threats in Iraq’s cash-heavy economy.

Importantly, the program is not a one-off session. Over three years, employees receive continuous development updates, and have access to a growing digital library of over 100 expert-led videos covering topics like sanctions screening, fraud typologies, and FATF updates. Certification ensures each staff member can prove their competence to internal auditors, regulators, and foreign correspondents.

A Pathway to Global Reintegration

FIB’s proactive investment in compliance reflects a broader national ambition: Iraq’s removal from the FATF grey list. The designation, which flags nations with strategic deficiencies in AML/CFT oversight, has historically restricted Iraq’s access to international finance. Today, banks like FIB are under increasing scrutiny—not just from the CBI, but from global banks, international investors, and multilateral agencies.

“The decision by First Iraqi Bank to invest in comprehensive AML/CFT training aligns directly with the expectations of international regulators and counterparties,” stated a K2 Integrity advisor working on the project. The firm also highlighted the importance of preparing for on-site inspections by the Central Bank and international audits.

Overcoming Iraq-Specific Hurdles

Iraq presents unique compliance challenges—legacy IT systems, incomplete customer databases, and a lack of integrated sanctions screening tools are just a few. The dominance of hawala networks and a reliance on cash (with over 85% of adults unbanked as of 2021, according to the World Bank) adds complexity to efforts to trace illicit financial flows.

FIB is tackling these issues head-on. The training teaches staff how to use digital monitoring tools in tandem with traditional banking processes. Modules also include practical instruction on working with the FIU (Financial Intelligence Unit) for timely suspicious activity reports, and how to flag cash structuring or suspicious trade documentation patterns—especially critical in high-volume trade hubs like Basra and Baghdad.

Another key lesson is the power of collaboration. Staff are encouraged to share best practices and build peer-to-peer relationships with other Iraqi and regional banks, through forums supported by the Central Bank and IFI.

Paving the Way for Sector-Wide Transformation

FIB’s initiative may serve as a blueprint for the broader financial sector in Iraq. As more banks follow suit, Iraq’s compliance risk profile could improve—helping attract investment, re-establish global correspondent banking ties, and lower the cost of international financial services.

“The IFI-FIB partnership is also setting an example for other Iraqi financial institutions,” said a CBI representative. “This creates a virtuous cycle: as more banks raise their compliance game, Iraq’s overall risk rating declines.”

Failure to meet FATF standards in the past led to de-risking and exclusion from global networks. Now, by embedding a robust compliance culture, FIB is helping the nation turn the page. “By investing in compliance, FIB is protecting itself—and the Iraqi financial sector at large—from these risks,” remarked a senior advisor from K2 Integrity.

A New Benchmark for Iraqi Banking

First Iraqi Bank’s new training regime is not just a compliance upgrade—it is a statement of intent. It demonstrates that Iraq’s financial institutions are not only willing to engage with international best practices but to lead by example.

The long-term success of this program will be measured not only by audits passed or certificates earned, but by how effectively FIB can detect and mitigate financial crime in practice. With this step, FIB joins the ranks of institutions committed to building a transparent, resilient, and globally trusted financial system—at a time when Iraq’s economic reintegration is more critical than ever. 

By fLEXI tEAM