Deputy Custodian of the Two Holy Mosque Prince Salman greets US Treasury Secretary Jacob Lew in Jeddah. (SPA)

US Treasury Secretary Jacob Lew said Tuesday that developments in Iraq, where militants have seized swathes of the country, emphasize the need to combat terror financing.

Addressing a press conference after talks with Deputy Custodian of the Two Holy Mosques Prince Salman and Finance Minister Ibrahim Al-Assaf, he said close cooperation between the two countries “is even more important given our shared concerns about developments in Iraq.”

Lew added: “The events in Iraq also underscore the importance more broadly of redoubling our efforts to combat the financing of terrorist organizations.”

Lew said he discussed with Al-Assaf “the need for Iraqi leaders to put aside differences and implement a coordinated and effective approach to confront terrorist groups such as the Islamic State of Iraq and the Levant.”

He described Riyadh as one of Washington’s “most important partners in combating terrorist financing.”

Meanwhile, fighting erupted at the northern approaches to Baghdad Tuesday as the UN warned Iraq is in danger of disintegrating in the face of the assault by militants.

Washington deployed some 275 military personnel to protect its embassy in Baghdad, the first time it has sent troops to Iraq since it withdrew its forces at the end of 2011.

Officials said on Tuesday that militants briefly held parts of the city of Baquba, 60 km from the capital. They also took control of most of Tal Afar, a strategic Shiite-majority town between Mosul and the border with Syria, where ISIL also has fighters engaged in that country’s three-year-old civil war.

Signs emerged Tuesday of a reprisal sectarian slaughter of Sunnis, as police said pro-government militiamen killed nearly four dozen detainees after insurgents tried to storm the jail northeast of Baghdad.