Iran is forgoing plans for now to transfer about 300 million euros ($347 million) in funds held in Germany to Iran after strong opposition from the United States, two sources with knowledge of the matter said on Wednesday.
The funds are held at the Hamburg-based Europaeisch-Iranische Handelsbank (eihbank). The bank was not immediately available for comment.
The US ambassador to Germany had been urging Berlin to stop Iran withdrawing large sums of cash from bank accounts in Germany to offset the effect of new US sanctions imposed after Washington withdrew from a 2015 nuclear deal.
"Iran is the world's leading state sponsor of terrorism. We must be vigilant," Ambassador Richard Grenell said on Twitter on Wednesday in reaction to news that Iran was dropping its bid to move the money.
The development was earlier reported by the German daily Sueddeutsche Zeitung and the broadcasters NDR and WDR.
Washington has announced new sanctions on Iran and ordered all countries to stop buying Iranian oil by November and foreign firms to stop doing business there or face US blacklists.
Iran argues it needs the cash for Iranian citizens travelling abroad since they cannot access recognized credit cards.