Digital Bank Application Process

Overview

The application for a digital bank license in Iraq is a formal legal process conducted by the CBI’s banking supervision department. It involves the submission of a comprehensive application package, a structured assessment by the CBI against defined criteria, and the issuance or refusal of a preliminary approval decision.

This article describes the application process from submission through to the preliminary approval decision, including the formal requirements for submission, the CBI’s assessment methodology, the powers the CBI exercises during the process, the grounds on which an application may be refused, and the legal status and conditions attached to a preliminary approval.

1. Who May Submit an Application

An application for a digital bank license may be submitted by any individual or legal entity that wishes to establish a digital bank in Iraq. The applicant must be the proposed legal owner or founder of the bank, or a person legally authorized to act on their behalf.

Corporate applicants must submit the application through their duly authorized representative. The application form prescribed by the CBI must be completed and signed by the founders. Where there are multiple founders, all must sign the application and the accompanying commitment and declaration document.

Applicants who do not yet meet all pre-license conditions may not submit a complete application. The CBI will not assess incomplete applications, and the mere act of submission does not preserve any right to participate in the first assessment cycle if the application is materially deficient.

2. Application Package: Required Documentation

The application must be submitted together with a comprehensive package of supporting documentation. The required documents include:

2.1 Corporate and Identity Documents

• Names, nationalities, and signatures of all proposed founders and shareholders or their authorized legal representatives
• Contact details including telephone numbers and electronic mail addresses
• The proposed administrative address of the bank
• A copy of the company’s articles of association and internal regulations (for entities already incorporated, or a draft for those in the process of incorporation)
• A document establishing the commercial name of the bank in both Arabic and English, confirmed by the relevant competent authority

2.2 Financial Documentation

• Evidence of the initial capital payment of IQD 30 billion
• A detailed economic feasibility study incorporating the business plan, strategic plans, budgets, financial projections, and financial indicators for the four-year period following the intended launch of services
• Proposed organizational chart for the bank and the expected number of employees

2.3 Technology Documentation

• A detailed technology plan including the proposed core banking system, online banking platform, and data infrastructure — including vendor names, software details, preliminary contracts, and all other relevant planning elements
• A technology plan and architecture document (Technology Plan and Architecture) in sufficient detail to demonstrate technical feasibility

2.4 Governance and Compliance Documentation

• Proposed organizational chart showing management hierarchy and principal management committees
• The governance handbook covering required internal policies
• Declaration of proposed board members including names and qualifications for the position
• Declaration of proposed senior management including names and qualifications for the position
• Evidence of QII status for the qualifying institutional investor in the ownership structure
• The shareholder agreement including all mandatory provisions required by the framework

2.5 The Commitment and Declaration

All founders must sign a commitment and declaration document in which they confirm that they have read and understood the digital bank licensing regulations and all applicable laws and instructions in Iraq, that they commit to full compliance with all licensing conditions, that all information and documents submitted are accurate and complete, and that they accept personal legal liability for any inaccurate or untruthful information provided.

3. CBI’s Assessment Process

Upon receipt of a complete application, the CBI’s banking supervision department commences a formal assessment. The assessment is conducted against the standards and criteria established in the licensing framework, including the Standards Booklet and the Detailed Assessment Guidelines described in Article 1 of this series.

3.1 Application Review Powers

The CBI has broad powers during the application assessment process. These include:

• The right to request additional information or amendments to the application at any point during the assessment
• The right to conduct interviews with proposed board members, senior management, and significant shareholders
• The right to commission independent assessments of any aspect of the application
• The right to reject an application at any stage if it determines that the applicant does not meet the required conditions
• An absolute discretion to refuse any application, regardless of whether the formal criteria appear to be met

3.2 Assessment Timeline

The deadline for submission of applications for the first assessment cycle is 30 June 2026. The CBI has indicated that preliminary approval decisions will be issued by 30 September 2026. These timelines are indicative for the assessment process — the application deadline is a binding cut-off.

3.3 Grounds for Refusal

The CBI may refuse an application on any of the following grounds:

• The application is based on false, misleading, or incomplete information or documents
• The applicant does not satisfy the licensing conditions prescribed by the framework
• The proposed ownership structure does not comply with the ownership and eligibility requirements
• The proposed board or management does not satisfy the fit and proper requirements
• The CBI determines, in its absolute discretion, that granting the license would not be appropriate for any other reason

Where an application is refused, the CBI issues a decision specifying the grounds for refusal. Applicants are notified in writing of the refusal and the reasons. There is no automatic right of appeal, though applicants may seek legal advice regarding their options.

4. Preliminary Approval: Legal Status and Conditions

A preliminary approval is a conditional authorization, it is not a full license and does not grant the same rights as a full digital bank license. It authorizes the applicant to commence pilot operations subject to the specific conditions and restrictions that apply during the pilot phase.

4.1 What a Preliminary Approval Authorizes

A preliminary approval authorizes the digital bank to:

• Commence operations as a digital bank on a pilot basis
• Offer the range of services permitted during the pilot phase (subject to the restrictions examined in Article 6 of this series)
• Begin the process of satisfying the remaining standards that must be met before a full license can be granted

4.2 Conditions Attached to the Preliminary Approval

The preliminary approval is subject to the full set of ongoing compliance obligations established by the framework. These include:

• Compliance with all pilot phase operational restrictions on deposits, credit, cards, and investments
• Progressive satisfaction of the standards specified for assessment cycles 1 and 2 within the prescribed timelines
• Payment of the second and third capital tranches by their respective deadlines
• Compliance with all ongoing reporting and notification obligations to the CBI
• Submission to continuing CBI oversight and examination

4.3 The Non-Transferability of the Preliminary Approval

A preliminary approval is issued to a specific legal entity and cannot be transferred. Any change to the legal name, registered address, or corporate structure of the authorized entity requires prior CBI approval. Any unauthorized change is a ground for cancellation of the authorization.

4.4 The Licensing Fee

Banks whose applications result in a preliminary approval are required to pay a licensing fee of USD 200,000 (or its equivalent in Iraqi dinars). This fee is payable at the commencement of the first assessment cycle — that is, in the second half of 2027. The fee applies to all banks admitted to pilot operations and is non-refundable.

5. Prohibition on Pre-Approval Use of Bank Name and Status

Prior to the grant of a preliminary approval, no applicant may use the word “bank” or the proposed bank’s name or brand in any documents, correspondence, communications, advertising, or other materials. No banking activities or operations of any kind may be conducted, and no marketing or promotion of the proposed bank’s services may take place.

This prohibition applies from the date the application is submitted until the date a preliminary approval is granted. Breach of this prohibition is a licensing violation and may be a ground for refusal of the application.