Dubai, UAE – November 2, 2014: Aerial view of the Dubai coastline with the Burj Al Arab hotel in front of the coastline. Is visible in the background the Dubai downtown skyline with the Burj Khalifa.
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The United Arab Emirates said on Saturday that media reports it has agreed to release billions of dollars of frozen funds to Iran are false.
“The Ministry of Foreign Affairs affirmed that these allegations are entirely false and unfounded, stressing that no frozen Iranian funds have been released, transferred, or facilitated through the UAE,” the government told CNBC in a statement.
Earlier, Reuters quoted four unnamed sources as saying the UAE has agreed to unlock the funds in a tactical shift following hundreds of attacks on Emirati military targets and infrastructure since the start of the U.S.-led war on Feb. 28.
But over the last week, the UAE has been spared Iranian projectiles, while Kuwait and Bahrain have been hit.
Reuters quoted two regional sources as saying the UAE had agreed to release a total of $10 billion, more than $3 billion of which had already been delivered.
The news agency quoted two other sources with knowledge of the arrangement as putting the total funds involved at $20 billion, adding that the move had been agreed in return for a halt to Iranian attacks on the UAE.
One of the sources with knowledge of the arrangement was also quoted as saying a first tranche of $3 billion had already been made available.
Reuters could not establish whether the funds earmarked for the transfers belong to the UAE or originate in long-blocked Iranian accounts in the UAE banking system, or elsewhere.
Dubai has been a crucial financial corridor for Iranian businesses and individuals seeking to bypass Western sanctions, selling oil abroad and channeling the proceeds into military programs and regional proxies, according to the U.S.-based Atlantic Council think tank.
Shell companies registered across Dubai’s sprawling free zones have for years masked the origin of Iranian oil and commodities. Informal currency exchange houses have also moved funds across borders outside the reach of conventional banking oversight.
America has been pressing the Gulf country to dismantle those networks. The U.S. Treasury has sanctioned UAE-based entities in recent years, with officials reiterating that enforcement within the UAE has fallen short of the country’s stated commitments.
– CNBC’s Emma Graham and Reuters contributed to this story.
