The United Arab Emirates is considering freezing billions of dollars in Iranian assets held in the Gulf state, a move that could sharply restrict Tehran’s access to foreign currency and global trade networks, The Wall Street Journal reported. 

Emirati officials have privately warned Iran of the potential action after Tehran launched more than 1,000 drones and missiles at targets in the UAE, the Journal reported. If implemented, the countermeasure would mark a significant escalation in pressure on Iran at a time when its economy, already strained by inflation, is facing the impact of an ongoing military conflict, according to the report. 

For decades, the UAE has served as a key financial hub for Iranian businesses and individuals seeking to operate beyond the reach of Western sanctions, analysts and U.S. Treasury Department officials told the newspaper. Iranian expats account for a significant portion of the UAE’s population in Dubai and Sharjah and the Iranian Business Council in Dubai has hosted networking and educational events as recently as November. 

But the recent spate of Iranian attacks on UAE soil threaten to undermine the country’s long-cultivated reputation as a safe haven for trade and commerce in the region. The attacks have particularly weighed on Dubai, whose large expatriate population has in recent days witnessed drone and missile attacks on landmark buildings and sites, including the Burj Al Arab hotel and the emirate’s international airport. 

“It’s hard to overstate the peril for Dubai’s economic model,” Jim Krane, a fellow at Rice University’s Baker Institute, recently told Reuters. 

In response, authorities in the UAE are weighing several options to disrupt illicit Iranian financial activity, people familiar with the discussions told the Journal. Potential measures include freezing assets of companies suspected of acting as fronts for Iranian trade and tightening oversight of currency exchanges used to move funds outside formal banking channels.

Accounts linked to Iran’s Islamic Revolutionary Guard Corps (IRGC) would likely be a primary target. According to a U.S. Treasury publication cited by the Journal, Tehran has increasingly allocated oil sales to the IRGC and other parts of its defense and security apparatus to generate revenue.

Officials are also considering maritime countermeasures, such as seizing Iranian vessels operating through Emirati ports and shipping lanes in an effort to disrupt Iran’s network of tankers used to transport sanctioned oil, the newspaper said, citing multiple sources. 

Emirati policymakers are also weighing the risks of retaliation if they move ahead with an asset freeze, including the potential for additional attacks on UAE territory and energy infrastructure, according to the Journal. The decision could disrupt lucrative trade and banking ties with Iran and further impact the UAE’s reputation as a global financial hub capable of attracting capital from politically sensitive sources.

Iran has long relied on front companies in the UAE to receive oil payments, conduct trade, and obscure the origin of funds, according to the U.S. Treasury and analysts who spoke to the Journal. Treasury data cited by the newspaper showed that about $9 billion passing through U.S. correspondent bank accounts in 2024 appeared linked to covert Iranian financial activity, with UAE-based firms receiving roughly 62 percent of those funds.

Read more at The Wall Street Journal