Iraq has instructed its banks and state financial institutions to enforce new U.S. sanctions targeting Hezbollah, ISIS-linked networks, and a number of individuals and companies accused of financing or facilitating the activities of the groups, underscoring Baghdad's efforts to strengthen compliance with international financial regulations amid mounting U.S. pressure.

The Iraqi Ministry of Finance issued a circular directing banks, government departments, state bodies and affiliated companies to implement two U.S. sanctions actions announced by the Treasury Department's Office of Foreign Assets Control (OFAC) in June 2026. The measures were imposed under the amended Executive Order 13224, Washington's primary counterterrorism sanctions authority.

According to official documents reviewed by Shafaq News, the directive instructs financial institutions to identify and block transactions involving designated individuals and entities. The circular was issued by the Director General of the Economic Department and the head of the Iraqi Fund for External Development, the state body responsible for managing Iraq's external development financing, and carries a ministerial annotation dated July 7, 2026, ordering the relevant authorities to implement its provisions.

One of the U.S. sanctions actions targets a Hezbollah financial and commercial network.

The Treasury designated three individuals, including Sleiman Antoine Frangieh, leader of Lebanon's Marada Movement, whom Washington accused of maintaining close ties with Hezbollah and using his political influence to secure economic benefits for the group. The sanctions also target Mahmoud Qmati, deputy head of Hezbollah's Political Council, and Wael Costanteen, chief executive of Al Shafa Administrative Services Limited, whom the Treasury alleges managed a financing network linked to Alaa Hasan Hamiyah, a Hezbollah figure accused of overseeing commercial operations that generate revenue for the group.

Five companies were also designated: Al Shafa Administrative Services Limited, also known as HEAL, an administrative services firm registered in Baghdad on June 29, 2025, under registration number 30787; Globe Technology Providers SARL, a Lebanese information technology and telecommunications company; Globe International SPC, registered in Oman; Al-'Ahd Company for Trade and Investment, a Syrian trade and investment firm; and Tyke SAL, a Lebanese wholesale trading company. According to the Treasury, the companies form part of a commercial and financial network supporting Hezbollah.

A separate U.S. sanctions action targets three individuals and six entities operating across Europe, the Middle East and West Africa that Washington accuses of facilitating financial transfers for ISIS.

Under Executive Order 13224, assets belonging to designated individuals and entities within U.S. jurisdiction are frozen, while U.S. persons and institutions are prohibited from conducting business with them. The Treasury may also impose secondary sanctions on foreign financial institutions that knowingly facilitate transactions, directly or indirectly, for sanctioned parties.

The latest directives mark another step in Iraq's efforts to tighten oversight of its banking sector and preserve access to the international financial system.

In November 2025, Iraq placed Hezbollah and Yemen's Houthi movement, also known as Ansarallah, on its terrorism financing blacklist to align with U.N. Security Council sanctions and international counterterrorism standards. The designations were issued by the Committee for Freezing Terrorist Funds and published in the Official Gazette, Al-Waqai Al-Iraqiya, Issue No. 4848, on Nov. 17, 2025.

The measures were based on Iraq's Anti-Money Laundering and Counter-Terrorism Financing Law No. 39 of 2015, the Freezing of Terrorist Funds Bylaw No. 6 of 2023, and U.N. sanctions frameworks targeting ISIS, al-Qaeda and affiliated organizations.

At the time, a senior Iraqi government official told Shafaq News the move reflected Baghdad's efforts to bring its regulatory and supervisory systems into line with Financial Action Task Force (FATF) standards and fulfill its international counterterrorism obligations. Less than a week later, the Committee for Freezing Terrorist Funds revised parts of the designation following a further review.

The latest banking directives come as President Donald Trump's administration intensifies its campaign to curb Iran's regional influence through financial as well as military pressure, expanding efforts to disrupt funding networks that Washington says sustain Tehran's allies across the Middle East.

The United States has increasingly relied on sanctions targeting companies, money-transfer networks, investment fronts and logistical facilitators that it says finance armed groups designated as terrorist organizations. Analysts say the inclusion of Hezbollah-linked entities reflects a broader U.S. strategy aimed at dismantling cross-border financial networks supporting Iran-backed organizations operating beyond Lebanon.

The measures also place Iraq in a politically sensitive position as it seeks to balance compliance with international banking standards against a domestic political landscape in which Iran-aligned political parties and armed factions continue to wield significant influence.

Washington has for years pressed Baghdad to strengthen oversight of its financial sector, arguing that Iraqi banks have been exploited for money laundering and to circumvent sanctions imposed on Iran. The United States has previously imposed restrictions on several Iraqi banks over alleged irregularities involving dollar transfers and cross-border transactions.

Financial analysts say the latest directives are likely to lead to stricter scrutiny of international transfers and further restrict the ability of armed groups and affiliated commercial networks to move funds through Iraq's banking system. They expect additional sanctions targeting individuals, companies and financial intermediaries across the region, with Iraq likely to remain under continued U.S. pressure to tighten compliance, strengthen oversight and close channels used to evade international sanctions.