Black Hand Riku is a blind former pirate captain who hides on Iki Island with his armour, the Sarugami Armor. You duel him at the end of the Iki Mythic Tale about his legend, and beating him earns you that armour.
Riku was the cruellest pirate to raid Iki. After he killed children on a refugee ship and skinned their samurai guard, his crew turned on him. He survived, burned his ship with them on board and escaped. Most of Iki thinks he is dead and that his ghost guards the armour.
He knows Jin is coming through dreams and the island's monkeys, which act as his eyes. He claims the blindness puts Jin at the disadvantage. Win the duel and you take the Sarugami Armor, which makes perfect parries and dodges stronger.
Fune
Fune leads the biggest band of raiders left on Iki Island in the expansion. She has no patience for samurai, but she teams up with Jin to fight the Eagle Tribe. Her side story about her daughter Toki is one of the darker threads on Iki.
Ankhsar Khatun
Ankhsar Khatun, called the Eagle, is the main villain of the Iki Island expansion. She is a shaman who leads the Eagle Tribe and uses a mind-bending poison she calls sacred medicine to break the people of Iki. She forces it on Jin early, and he fights her hallucinations as well as her army.
Crimson Dye Merchant
The Crimson Dye Merchant, whose name is Sao, is an Iki Island vendor who sells red cosmetics for Flowers. Unlike the other dye merchants, you unlock him by winning the Hidden Cove Tournament at Fune's Refuge.
Khunbish
Khunbish is the Eagle's lieutenant and the second villain of the Iki Island expansion. The huge commander holds Fort Sakai, Jin's family fort, and tortures prisoners there before forcing the Eagle's medicine on them. You face him when you take the fort back.