The bank employee in Brussels sounded almost apologetic when she told me my business was no longer wanted since I live in Iran, which is under tightening U.N. and U.S. sanctions over its disputed nuclear plans.

I argued with her over a scratchy phone line: "But I'm a European Union citizen." It was in vain.

The account I had opened with Banque Bruxelles Lambert (BBL) when I worked in the Belgian capital in the mid-1990s was frozen, and I must move my money elsewhere.

Iran was among countries on a "black list" the bank had, she told me: "It is impossible to work with your address."

Based in Tehran over the last year, this was the first time I was personally affected by financial and other sanctions on the world's fourth-largest oil producer.

With Western banks cutting ties with the Islamic Republic, it is becoming more and more difficult to transfer funds to the country of 70 million people.

Tehran's increasing financial isolation is forcing some to bring in money by hand in thick wads of $100 bills on the plane from Dubai, the PERSIAN Gulf's financial centre, or elsewhere.

Iranian friends and other expatriates I know also complain they are no longer able to open or hold dollar accounts abroad.

But I was still surprised to receive a call from Dutch financial services group ING, which bought BBL in the late 1990s, informing me there was a problem with my account.

I had thought it was safe because it was in euros and I had never used it to transfer money to or from Iran.

We were cut off, so I called the branch in Brussels which I have dealt with for more than a decade. "It's international politics from what I understand," the bank employee explained after confirming the news.

FINANCIAL PRESSURE

An ING spokesman in Amsterdam, Raymond Vermeulen, gave me more details. He said the bank took a "business decision" last year to stop most dealings linked to Iran but that the number of clients affected was limited.

"There is a whole set of international regulations and sanctions and they require extensive screening procedures and compliance processes," he said. "This has led to vastly increased costs for processing transactions with a country like Iran."

ING's annual report for 2007 also said it was halting business with North Korea, Myanmar, Sudan, Syria and Cuba -- all of which face various U.S. punitive measures.

Washington is spearheading a drive to isolate Iran over work it suspects is aimed at making nuclear bombs, a charge Tehran rejects, but Vermeulen declined to say whether U.S. pressure had played a role in ING's decision.

I toyed with the idea of challenging the bank but opted in the end to send my money to another bank in Europe, while reflecting over how my modest financial assets had been caught up in a deepening standoff over Iran's nuclear programme.

Western banks including Deutsche Bank, HSBC and Credit Suisse have either stopped U.S. dollar transactions with Iran or severed ties altogether.

Anecdotal evidence suggests there are still ways around the restrictions: a fellow Swede says he can transfer money to Iran from his bank in the Nordics and an Iranian woman I know receives funds from France via a third country. Others give their bank addresses outside Iran to keep their accounts open.

But the net seems to be tightening, with fewer and fewer banks willing to engage in any Iran-linked business.

"In reaction to U.S. and multilateral actions, the world's leading financial institutions have largely stopped dealing with Iran, and especially Iranian banks, in any currency," senior U.S. Treasury official Stuart Levey said last month.

Iran, which says it earned $70 billion from oil exports over the last year, has shrugged off the impact of the sanctions.

But for me, at least, they are starting to bite.