I’m looking to opening my first bank account, I have however heard that Google is implementing API changes that lock out custom ROMs out of using banking apps, is this true?
Here is a list of compatible banks:
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my country is not on here 
I’m trying to register with https://fib.iq/
There are no guarantees that any banking app will work on GrapheneOS, even if your app is not on the list. It’s not an exhaustive one.
About 15% block anything that isn’t a stock OS. If you see a notification about the app using “Play Integrity” and the app doesn’t work even after toggling Exploit Protection Compatibility mode for it, there’s a good chance you can’t use it on GrapheneOS.
You can let the developers know by sending them Attestation compatibility guide.
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From Iraq I assume?
Yeah, situation might be more complex there and quite hostile to GOS overall. 
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‘From Iraq I assume?’
Yup!
not that I know of, you won’t get in trouble with the police for using GrapheneOS, Iraq is a corrupt state that likes to kill its own people but isn’t really a police-state, there is no law or campaign against privacy or digital security or VPNs.. however… the banks don’t even know what an API is (I just got off the phone with FIB and they said “well, if GrapheneOS is based on Android it ought to work but other than that..”)
If you want to play it safe, ask the bank if you can also do online banking (in the browser) without a phone app to authenticate, for example with an SMS code or a physical device that generates authentication codes. This way, you can still access your online baking without an “approved” smartphone.