The European Union (EU) has removed Iraq from its list of high-risk countries for money laundering and terrorism financing. Iraqi Prime Minister Mustafa Al-Kadhimi attributed the delisting to a “manifestation of our effective diplomatic efforts.” The move comes at a time of immense economic hardship in Iraq, and could bring about positive change by attracting direly-needed foreign investment.

The delisting will make it easier, at least on paper, for European and other foreign investors to operate in the country. Importantly, it eases constraints on remittances to and from Iraq, among other positive knock-on effects for the local banking sector. But Iraq will still need to effectively implement financial and banking reforms as well as seriously tackle endemic corruption to secure tangible and lasting...