Police would neither disclose how many people had been arrested nor reveal the amount of money involved, although a senior police officer told the AP news agency that the suspects included both Arabs and Europeans.

A report in the Al-Khaleej daily, however, suggested the sums involved are in the millions of dirhams (one US dollar is worth 3.7 dirhams).

And Gulf Today reported that at least two of the suspects were Europeans, saying they had "admitted that the money in their possession came from illegal practices".

Tightened

Dubai has long been thought to be a key crossroads for shady dealings, and until January money laundering was not against the law.

Before then, the central bank simply monitored financial institutions to try to staunch the flow of dirty money.

But in the wake of the 11 September tragedy, pressure from the US helped catalyse a change, resulting in the arrests.

US intelligence believes some of the money used by the hijackers to fund their operation on 11 September passed through the UAE.