The United Arab Emirates is considering restricting Iran’s access to billions of dollars held in the Gulf state, a move that could disrupt the financial channels Iranian businesses have relied on for years.
The Wall Street Journal reported on Thursday that Emirati officials have warned Iranian authorities that such a step is under review, although no final decision has been made.
The potential measure comes as Tehran faces mounting economic pressure linked to sanctions and intensifying conflict involving the US and Israel.
Limiting access to funds and trade infrastructure in the UAE could further squeeze Iran’s foreign currency flows and complicate its global commercial operations.
Dubai financial corridor
Dubai has long functioned as a key financial corridor for Iranian traders and companies seeking ways around Western sanctions.
Businesses connected to Iran have used the emirate’s extensive free zones, shipping networks, and financial services sector to sustain trade flows.
Research from the Atlantic Council describes how these channels have allowed Iranian actors to sell oil abroad and direct proceeds into military programmes and regional proxy networks.
For years, shell companies registered in Dubai’s free zones have helped obscure the origin of Iranian oil and commodities.
Informal currency exchange houses operating across the city have also facilitated cross border transfers that bypass conventional banking oversight.
These networks have allowed Iranian businesses to maintain links to global markets even as formal financial channels narrowed under sanctions.
US pressure over enforcement
The United States has repeatedly pressed the UAE to dismantle sanction evasion networks linked to Iran.
In recent years the US Treasury has sanctioned several entities based in the UAE that were accused of facilitating Iranian transactions.
American officials have also signalled that enforcement inside the Gulf state has not always matched the commitments made by Emirati authorities.
Washington has continued to call for tighter oversight of businesses and intermediaries suspected of helping Iranian firms move funds and conduct trade through Dubai.
Conflict raises stakes
The policy review is taking place as regional tensions have escalated sharply.
Iran launched more than 1,000 drones and missiles at targets in the UAE as retaliation for a joint US and Israel attack.
The strikes damaged infrastructure including Dubai International Airport and the Fairmont hotel, along with nearby residential and tourist areas.
The attacks have unsettled the expatriate community and global investors that Dubai has worked for decades to attract by presenting itself as a stable commercial hub in a volatile region.
Despite the escalation, the UAE has indicated it will not join direct military action against Iran.
Officials earlier this week said the country would maintain a defensive posture consistent with its policy of de escalation and its commitment to the Charter of the United Nations.
At the same time authorities are examining financial responses.
According to the Wall Street Journal, officials are reviewing potential measures including targeted freezes of assets held by shell companies linked to Iran and broader scrutiny of local currency exchange houses that form part of Tehran’s financial plumbing.
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