updated 7/2/2009 7:56:27 PM ET 2009-07-02T23:56:27

The Obama administration on Thursday authorized the seizure of assets belonging to an extremist organization in Iraq and an Iranian backer of insurgents, saying both are responsible for deadly attacks in Iraq.

The Treasury Department is targeting Abu Mahdi al-Muhandis and the Iraq-based group Kata'ib Hizballah for committing, directing or supporting acts of violence in Iraq against U.S. and Iraqi forces.

In a separate move Thursday, the State Department designated Kata'ib Hizballah as a foreign terrorist organization.

Both designations prohibit any transactions between them and Americans and freeze any assets they may have in the U.S.

Financial pressure has been an effective tool for combating terror groups and curbing the flow of illicit weapons. Freezing property and assets alerts the international banking community to avoid doing any business with the targeted groups or individuals.

"This is a continuation of something that had been working effectively in the previous administration," said Matthew Levitt, a former Treasury Department official and a counterterrorism expert at the Washington Institute for Near East Policy.

Militia groups
Earlier this week, the Treasury Department imposed sanctions on a company in Iran, Hong Kong Electronics, that is accused of involvement in North Korea's missile proliferation network.

On June 18, the department's Financial Crimes Network warned U.S. banks that North Korea might try to skirt financial sanctions by using various "deceptive practices." The goal is to prevent North Korea from evading U.N. action to block the financing of weapons of mass destruction programs or activities.

The Treasury Department did not say what assets al-Muhandis and Kata'ib Hizballah have in the U.S.

The announcement described al-Muhandis as an adviser to Iran's Qods Force, which has given support to Kata'ib Hizballah and several different militia groups. In one example cited, he assisted in the delivery of mortars, rockets and explosives from Iran to Iraq.

"Al-Muhandis also ran a weapons smuggling network that moved sniper rifles through the Iran-Iraq border to Shia militias that targeted coalition forces," the Treasury Department said.

Kata'ib Hizballah, which is based in Baghdad, has used rocket-propelled grenades, improvised rocket-assisted mortars, and other weapons against U.S. forces in Iraq, the department said. A February 2008 attack by the group in the Rustamiya area resulted in U.S. casualties.

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