An official gazette issue dated November 17 published a decision about Iraq freezing the assets of Iran-backed armed groups due to acts of "terrorism".

The classified central bank document seen by AFP said: "Based on the committee for freezing terrorists' assets decision No. 61 of 2025, published in the Iraqi gazette, please remove paragraphs 18 and 19 from the list," which initially named Hezbollah and the Houthis.

It added that "the committee did not approve the freezing of these entities' assets," and that their appearance on the list "seems to have been a mistake."

The central bank said the amended decision would be published in the official gazette.

Meanwhile, Prime Minister Mohammed Shia al-Sudani ordered an "urgent investigation" into "the error".

The circulation of the initial gazette announcement drew widespread criticism in Iraq, especially among pro-Iran politicians.

Hussein Mounes, the head of a parliamentary bloc close to the powerful armed group Kataeb Hezbollah, accused the government of being "weak" and said it "lacks dignity".

Kataeb Hezbollah and other Iraqi armed groups are part of the Iran-backed so-called "axis of resistance", which also includes Hezbollah and the Houthis -- most are designated as "terrorist" groups by the United States.

Washington has said that it was determined to cut off Hezbollah's sources of funding, and it has been pressuring Lebanon to do so.

Iraq has for years navigated a delicate balancing act between its allies Iran and the US.

Washington has also put pressure on Iraq to disarm Iran-backed groups and to free itself from Iranian interference.

It has also sanctioned Iraqis accused of helping Tehran evade sanctions.