The United Arab Emirates is weighing freezing billions of dollars of Iranian assets held in the Gulf state, according to people familiar with the discussions, a move that could sever one of Tehran’s most important economic lifelines.
If the U.A.E. goes ahead, it would significantly curb Tehran’s access to foreign currency and global trade networks as its domestic economy, already buckling under inflation, is now engulfed in a military conflict.
Emirati officials have privately warned Iran—which has fired more than 1,000 drones and missiles at targets in the U.A.E.—of the possible action, people familiar with the warnings said. It isn’t clear when, or if, the Emirati government will decide to act.
The Emirati Foreign Ministry didn’t respond to a request for comment.
The U.A.E. has for years functioned as a financial hub for Iranian businesses and individuals seeking a haven from Western sanctions, according to analysts tracking Tehran’s activities and the U.S. Treasury. Iran’s sanctions-evasion infrastructure has allowed Tehran to keep selling oil abroad and use the proceeds to fund weapons programs and regional proxies, they say.
The U.A.E. has previously said it adheres to sanctions and has a strong commitment to protect the integrity of the global financial system.
Any move by the U.A.E. to limit Iranian financial activities there “would be very significant, because the U.A.E. is the most important conduit for Iran’s engagement with the global economy,” said Esfandyar Batmanghelidj, chief executive of Iran-focused think tank Bourse & Bazaar.
U.A.E. authorities are weighing several measures to dismantle illicit Iranian operations, officials familiar with the matter said. They range from freezing the assets of U.A.E.-based shadow companies used to mask trade to a sweeping financial crackdown on local currency exchanges which are used to move money outside of formal banking channels.
If the U.A.E. decides to move on Iran’s shadow-financing empire, a prime target would be accounts affiliated with the Islamic Revolutionary Guard Corps, the powerful group responsible for defending and perpetuating the regime, the officials familiar with the discussions said.
Tehran has allocated a growing portion of its oil for the IRGC, as well as other parts of the defense and security complex, to sell on the international market, according to a Treasury publication last June.
Beyond financial maneuvers, policymakers are also considering direct maritime action, such as seizing Iranian ships, two of the officials familiar with the discussions said. Such moves would be aimed at crippling Iran’s shadow fleet of oil tankers and intermediaries operating across Emirati ports and shipping lanes.
Any efforts to squeeze Iranian assets would mark a sharp departure from the U.A.E.’s historical effort to balance its strategic alliance with the U.S. against its proximity to Iran. Until now, the country has largely refrained from weaponizing its financial sector against its neighbor across the Persian Gulf.
In seeking to become an international financial center, the U.A.E. has welcomed capital from around the world, often with little regard for its provenance. After Russia invaded Ukraine, the U.A.E. was one of the main beneficiaries, playing host to traders of Moscow’s commodities and inviting Russian money and bankers.
The West—including U.S. officials—has previously pressured the U.A.E. to tighten scrutiny on money flows and crack down on sanctions evasion. In 2022, the Financial Action Task Force, a Paris-based global finance watchdog, placed the U.A.E. on its “gray list” for failing to adequately combat money laundering and terrorism financing.
A U.A.E. official has previously told The Wall Street Journal that the U.A.E. had a robust process to deal with sanctioned people and companies and that Emirati banks monitored compliance. In 2024, the Journal reported that Dubai’s main state-owned bank closed some accounts held by Russian oligarchs and oil traders after U.S. officials pressed the U.A.E. to shut Moscow’s backdoor to the international financial system.
Around the same time, the FATF removed the U.A.E. from the list, saying it had strengthened its anti-money-laundering regime.
The latest conflict with Iran has put the U.A.E. in a difficult spot, casting doubt on the country’s carefully cultivated reputation as a haven in a volatile region. Iran’s drone and missile attacks have caused some damage at a Dubai airport, as well as residential and tourist areas around the Burj Al Arab hotel and the Palm Jumeirah man-made island.
Several people involved in the discussions said Emirati officials are weighing the risks of an asset freeze, including the possibility that it could trigger prolonged retaliation by Iran against Emirati territory and its critical energy infrastructure. Such a decision would also upend lucrative trade and banking ties with Tehran and damage the U.A.E.’s ability to attract and retain capital from other politically charged sources, such as Russia.
Any asset freeze is unlikely to cover all accounts held by Iranian companies and nationals, hundreds of thousands of whom live in the U.A.E., analysts said.
Andreas Krieg, a senior lecturer at the School of Security Studies at King’s College London, said that a more targeted approach is more likely because the U.A.E. doesn’t want to lose all of this business. Krieg said that IRGC-linked accounts would be frozen first.
“This is the most important nonmilitary lever the U.A.E. have to play against the Iranians,” Krieg said.
In 2024, $9 billion passing through correspondent accounts maintained by U.S. banks appears to have been tied to clandestine Iranian financial activity, according to the Treasury Department. The Treasury said U.A.E.-based firms received 62% of those funds, much in relation to oil sales by Iran-linked companies in Dubai.
Iran has established front companies in the U.A.E. to receive payments for oil, settle trades and disguise the origin of funds, according to the Treasury and analysts tracking Tehran’s activities.
Iran has also maintained a shadow fleet of aging ships that move sanctioned oil, often trying to disguise their location and ownership. Most of the shadow tankers involved in Iran are owned and managed by companies in the U.A.E. and Asia, according to the Treasury. https://www.wsj.com/world/middle-east/u-a-e-explores-freezing-iranian-assets-to-punish-tehran-for-attacks-904503de?mod=WSJ_home_mediumtopper_pos_1
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