Abu Dhabi found itself, during the Iran war, in a highly awkward position. The Gulf state is among the most exposed, compared to its neighbors, to Iranian missiles and drones, while at the same time it has been one of the most important financial and commercial gateways that Tehran has used over the years to circumvent international sanctions.
Since the outbreak of the war on February 28 until the ceasefire came into effect on April 8, Iran launched more than 2,800 missiles and drones at the UAE, according to official estimates. This scale of attacks, according to informed sources and experts who spoke to Alhurra, has pushed Abu Dhabi to reconsider its financial relations with Tehran.
The UAE has not yet officially announced any measures in this regard. However, sources—including experts and individuals familiar with the issue—told Alhurra that Abu Dhabi has tightened its procedures against suspicious financial transactions linked to Iran as part of its response to Iranian attacks on the Gulf state.
The economic expert and prominent Emirati businessman Hussein Al-Qamzi says that Abu Dhabi has begun to view the issue of financial transactions as a threat to national security, not merely a matter of compliance with international sanctions.
“What we are seeing today is greater oversight of cross-border transfers, stricter Know Your Customer procedures, and more precise monitoring of trade finance operations, exchange houses, and remittance services, in addition to broader scrutiny of shell companies or commercial structures that may be used to circumvent sanctions,” Al-Qamzi added in remarks to Alhurra.
The UAE has likely been the most important external financial and logistical hub for Iran over the past twenty years, said an Iranian source familiar with Iran’s dealings in the UAE, speaking to Alhurra.
In March 2022, the Financial Action Task Force (FATF) placed the UAE on its “grey list” of countries requiring increased monitoring for anti-money laundering efforts.
In addition to being subject to closer monitoring, countries on the “grey list” also face reputational risks, potential adjustments in credit ratings, difficulties accessing global financing, and higher transaction costs.
The UAE was removed from the list in 2024 after Abu Dhabi introduced substantial improvements to its regulatory systems and established an executive office to combat money laundering and terrorist financing.
According to the same source, Dubai and Iran have long-standing extensive trade relations. A large number of Iranians and long-established commercial families residing in the UAE have also provided a ready-made network of exchange and trade companies.
“The UAE was the primary hub for Iran’s use of the hawala system, which allows the transfer of financial value without physically moving cash across borders,” the same source noted. He added that most everyday goods purchased by Iran are not shipped directly to it; instead, they are first transported to the UAE, where shipments are unloaded and issued new documentation to conceal their true destination, before being re-exported across the gulf to Iran.
Investigative Iranian journalist Mahtab Divsalar told Alhurra that billions of dollars in Iranian funds have flowed annually through the UAE over the past two decades in particular, making the Gulf state the main lifeline that has kept Iran’s economy connected to the world.
A report issued last October by the U.S. Treasury documented suspicious transactions worth approximately $9 billion in 2024 that passed through the U.S. financial system via informal exchange companies. The report stated that companies based in the UAE received 62% of those funds, a significant portion of which was linked to oil sales carried out by Iran-related companies in Dubai.
The U.S. Treasury said at the time that Iran used a parallel banking system relying on front companies and exchange offices in the UAE and Hong Kong to transfer oil revenues and evade sanctions.
The report directly indicated that a large share of Iran’s “parallel banking” operations passed through companies registered in the UAE due to the ease of establishing companies and lower levels of oversight compared to other countries.
These financial flows enabled Iran to sell sanctioned oil and petrochemicals, purchase military technology, and fund the Islamic Revolutionary Guard Corps and its proxies such as Lebanon’s Hezbollah, according to the report.
The UAE is arguably the single most important link in Iran’s sanctions evasion system. Hundreds of shell companies registered in Dubai’s free zones sell Iranian oil, petrochemicals, and other goods to buyers worldwide.
Informal hawala networks and exchange houses also transfer dollars on behalf of Iranian entities entirely outside the formal banking system, allowing them to bypass restrictions that prevent Iran from accessing international correspondent banking networks.
“Cutting off this link would disrupt the entire mechanism through which funds are legitimized before reappearing as clean capital,” said Andres Ilves, editor of Iranian affairs at MBN. “The impact would be very significant on Iran in general and on the Islamic Revolutionary Guard Corps in particular, as these suspicious transactions are at the core of what the UAE’s tightening measures are targeting.”
During 2025 and 2026, the U.S. Treasury imposed sanctions on dozens of companies and individuals linked to Iran inside the UAE, accusing them of facilitating Iranian oil sales and transferring funds on behalf of the IRGC and the Quds Force.
Estimates of the size of Iran-linked assets in the UAE vary widely, with some analysts putting them between $20 billion and $50 billion annually or more, including oil, trade, real estate, gold, and corporate accounts. In addition to tightening measures against shadow networks, the UAE is also considering freezing billions of dollars in Iranian assets held in the Gulf state, according to a report published by The Wall Street Journal last March.
The real question is how far the UAE is willing to go in pursuing a path of economically suffocating Iran.
“Uncovering all these hidden networks is complex and shutting them down overnight could cause local economic disruption. Even if Iran loses Dubai entirely, it will simply absorb higher costs and shift its operations to alternative hubs,” Divsalar said.
Accordingly, Iran may resort to relying on other neighboring countries with more flexible banking systems or open borders.
Although there are no precise figures, leaks, breaches, and documents from inside Iran show that the UAE has been the primary hub for money laundering and sanctions evasion, but it was certainly not the only one. Other regions are also used, such as the South Caucasus, some other Gulf states, and a number of East and West Asian countries.
In fact, these regions have seen an increase of between 15% and 20% in Iran-related trade since the UAE began imposing restrictions in April 2026, according to Iranian sources familiar with the matter who spoke to Alhurra.
“Iraq is already a major source of U.S. dollar smuggling into Iran, and Oman and Turkey have also previously been used in Iranian trade, although the United States is pressuring them as well to comply with sanctions,” Divsalar said.
The article is a translation of the original Arabic.
Ghassan Taqi
A journalist specializing in Iraqi affairs, he has worked with the Middle East Broadcasting Networks (MBN) since 2015. He previously spent several years with Radio Free Europe/Radio Liberty, as well as various Iraqi and Arab media outlets.
Sakina Abdallah
A Saudi writer, researcher, and TV presenter
