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Wed 29 Feb 2012 11:40 AM

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Dubai bank targeted by US for Iran oil dealings

US Treasury Department believed Noor Islamic Bank conduit for Iran oil

Dubai bank targeted by US for Iran oil dealings
The bank is said to have closed off dealings with Iran in December

The US government has forced Dubai-based Noor Islamic Bank to stop channelling billions of dollars from Iranian oil sales through its accounts, part of Western measures to curb Tehran's disputed nuclear programme.

The measure cuts off another of Iran's links to the international banking system, forcing it to seek other channels to handle vital foreign currency earnings on oil sales.

A spokesman for Noor Islamic said it complied with all international regulations on Iran.

"When we became aware, in December 2011, that unilateral US sanctions were to be applied against a number of Iranian banks we took pre-emptive action to end our business relationships with Iranian banks licensed in the UAE," he said.

The Wall Street Journal said the bank had facilitated as much as 60 percent of Iran's foreign oil sales - estimated at $80 billion - by late last year.

A banking source familiar with the matter said the bank had been winding down its positions since December.

"The bank (Noor) made so much money out of this that they just milked it," the source said, suggesting it had handled tens of billions of dollars. "It was just too good to be true."

It was not clear if other banks were under investigation, but government officials confirmed that Noor was the first to be targeted in the country. Turkey's Halkbank is also known to handle payments for Iran's oil sales, but Noor Islamic appears to be the first in the world to have yielded to US pressure.

An official at the UAE Ministry for Economic Affairs said only Noor Islamic had been targeted so far.

"Of course, as the UAE government, we will comply with the UN resolutions," Khalid al-Ghaith, assistant foreign minister for economic affairs, told Reuters at a conference in Abu Dhabi.

He said officials were in contact with the US to try to reduce any possible harm to the UAE banking system or its companies.

A US Treasury official declined to comment on Noor Islamic, but said that the United States has worked "closely and well with the UAE government."

"We remain engaged with our international partners, including the UAE, to ensure the effectiveness of international sanctions against Iran," the official said.

The move was seen as a positive step in relations between the United States and the UAE, which announced a $3.48 billion deal at the end of 2011 for a US-built missile defence system.

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