Wouldn't it be the alpha carbon that would function as a nucleophile to attack C2H5I?
Plus, what would the water molecules be doing in order to form that carbonyl group?
Not sure if this is completely accurate but here's what I see. The last step is a bit simplified but the basic idea is water attacks the carbocation and deprotonates to form an alcohol. The amine can take an H off a H2O, making it a good leaving group. The attached hydroxide group can then form a carbonyl, kicking off the amine. And yes, it's the alpha carbon that acts as a nucleophile when it attacks the ethyl iodide.
This is in the 2017 Destroyer question 71. Check out masterorganicchemistry (subscription required). This reaction is called "Alkylation of enamines with alkyl halides", and there, you will see such an examples. Check example 3.