Iraq Removes Hezbollah and the Houthis from Sanction List Hours After Placing Them on the List

The government of Iraq initially froze the assets of two Iran-backed militant groups — Hezbollah (based in Lebanon) and the Houthi movement (from Yemen) — under a national list of groups subject to sanctions.  The freeze was meant to signal a crackdown on Iran-linked “terrorist proxies.”

But within hours, the government reversed course: it declared the move an “error,” removed Hezbollah and the Houthis from the sanctions list, and launched a probe into how the designation happened in the first place.

The report explains that Iran already has a strong influence inside Iraq through militias (part of the Popular Mobilization Forces, PMF) trained, supported, and politically connected to Iran and its regional allies. Iraq serves as a crucial transit point for Iran to move weapons and personnel across the Middle East.

Economically, these Iran-linked groups benefit heavily: they reportedly make over $1 billion a year through oil smuggling and sanctions evasion. The official PMF budget of about $3.5 billion also helps fund these activities.  Iraq has even created state-linked companies controlled by militias that secure government contracts—some of which U.S. authorities have sanctioned for supporting Iran-backed terrorism.

The Federal Integrity Commission (FIC) of Iraq announced that it recovered slightly over seventeen million U.S. dollars in corruption cases. This was made possible through coordination with Iraqi judicial and oversight bodies, as well as international partners under existing anti-financial-crime laws and global agreements.

As part of its enhanced anti-corruption efforts, the Commission said it has expanded international cooperation — working with the Global Operations Network of Law Enforcement Authorities (an international law-enforcement network) to speed up the exchange of information on corruption cases, smuggled funds, and suspects wanted by Iraqi courts.

Domestically and internationally, the FIC has strengthened its tools for tracking illicit money flows and fugitives. It opened a secure channel using the goAML platform (used for anti-money-laundering and counter-terror financing), launched a special portal on the national e-platform to receive tips on smuggled money and wanted individuals, and activated direct access to the INTERPOL databases.  

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