Iraq might freeze assets of Iranian-backed militias, according to media reports on Thursday.
“Iraq’s Official Gazette announced that the country would freeze the money of Iran-backed terrorist groups, including Lebanon’s Hezbollah and Yemen’s Houthis,” Reuters reported. “The state’s news agency said Iraq would correct the list of the groups whose funds would be frozen.”
Hours later, however, Shafaq News, a Baghdad-based news agency, reported: “The Iraqi authorities have effectively backed down from including the Lebanese Hezbollah and the Ansar Allah-Houthi group on the lists of frozen terrorist funds, after publishing an official clarification and a document issued by the Central Bank of Iraq confirming that Baghdad’s approval was limited to entities and individuals linked exclusively to ISIS and al-Qaeda.”
The controversy has not ended, but it appears that it is unlikely Iraq will really move forward to target the Iranian-backed proxy groups and militias.
Khor Mor gas field attack
The move comes a week after an attack on the Khor Mor gas field in the autonomous Kurdistan Region of Iraq. Iranian-backed militias are suspected of carrying out the attack, which led to power cuts in the region.
The US and the UN condemned the attack, and Iraqi officials rushed to pretend they would investigate. Iraq has blamed “outlawed” groups for the incident, which they say involved two kamikaze drones.
There is pressure on Baghdad from Washington to do more to curb the role of Iranian-backed militias such as Kataib Hezbollah. The militias are part of the Popular Mobilization Forces and are actually official paramilitaries of the government.
They act as official forces, and they act outside the law. The US has sanctioned most of the militias as terrorist groups, except Badr, which is the largest network of militias.
The “Committee of Freezing Terrorists’ Funds [had] said it would remove some parties from the list, without naming them, and it is unclear whether Hezbollah and the Houthis will be included in the updated list,” Reuters reported Thursday.
“The move to freeze funds of Iranian proxies will likely be welcomed by Washington, which has long sought to reduce Iran’s influence in Iraq and other countries in the Middle East where Tehran has allies,” the report said.
Other online commentators said Iraq was finally doing the right thing.
“According to the Iraqi Gazette... the decision – issued by the Committee for Freezing Terrorists’ Assets – lists 24 organizations, including Hezbollah [No. 18] and the Houthis [No. 19], both accused of ‘participation in committing a terrorist act,’” one commentator wrote.
UAE-based news site Al-Ain News reported: “The [Iraqi] official, who preferred not to reveal his identity due to the sensitivity of the matter, said that the decision ‘comes within the efforts to align the Iraqi legal and regulatory system with the requirements of the Financial Action Task Force (FATF).’ [He then said] “the lists are being updated continuously based on amendments received from the sanctions committees of the Security Council.”
Iraq “announced that it had designated the Lebanese Hezbollah and the Houthis in Yemen as terrorist organizations and frozen their movable and immovable assets for their involvement in ‘committing a terrorist act,’” the report said.
Iraq was moving forward “based on the Anti-Money Laundering and Counter-Terrorism Financing Law No. 39 of 2015, the Terrorists’ Funds Freezing System No. 6 of 2023, in addition to the Security Council resolutions related to ISIS, al-Qaeda and the entities associated with them,” it added. “These decisions obligate all banks, financial institutions, and relevant authorities in Iraq to freeze the movable and immovable assets belonging to the names included, and to prevent any financial or banking dealings with them, directly or indirectly.”
“Iraq has also listed more than 100 entities and individuals around the world on its terrorism list, with a government committee noting that some of those listed are sanctioned under UN Security Council resolution,” Al-Ain News reported.
Shafaq News, which said Iraq was actually backtracking on the decision, reported: “The Central Bank of Iraq’s Committee for Freezing Terrorist Funds said in a statement to Shafaq News Agency that its decision No. 61 of 2025, published in the Iraqi Gazette No. 4848 on November 17, 2025, was based on a request from Malaysia and Security Council Resolution 1373 of 2001 regarding freezing the funds and assets of persons and entities linked to ISIS and al-Qaeda.”
The official “added that the published list mistakenly included a reference to a number of parties and entities that are not linked to any terrorist activities with the two mentioned organizations,” the report said, adding that Iraqi approval was limited to names linked to ISIS and al-Qaeda, and that the inclusion of other entities came as a result of publishing the list before it was revised, and that what was stated in the Iraqi Gazette will be corrected by removing those entities and parties from the list of entities linked to the two organizations.”
“This clarification was supported by an official document issued by the office of the Governor of the Central Bank of Iraq, signed by the Acting Deputy Governor and Head of the Committee for Freezing Terrorist Funds, Ammar Hamad Khalaf, and addressed to the General Secretariat of the Council of Ministers – Department for Freezing Terrorist Funds,” Shafaq News reported.
The document is dated December 4 and “requests the deletion of paragraphs (18-19), which pertain to the listing of Hezbollah and the Houthis, from Resolution 61 concerning certain entities, due to the Committee’s failure to approve the freezing of their funds, explaining that the publication of their names took place before the necessary observations were included,” the report said.