The World Chess Federation (FIDE) says its Swiss bank announced that the federation's accounts would be immediately closed because its president - with whom the FIDE secretariat is embroiled in a power struggle - is under U.S. sanctions for alleged dealings with the Syrian government.
Kirsan Ilyumzhinov, a Russian who has headed FIDE for over two decades, was placed under U.S. sanctions in November 2015, accused of aiding the Syrian government.
Ilyumzhinov, a millionaire businessman and ex-politician, has denied the accusations.
"Mr Kirsan Ilyumzhinov denies the outrageous and false allegations made against him and is not aware that FIDE's bank accounts have been frozen by UBS," his London solicitor Nigel Kushner said in a statement.
"Mr Ilyumzhinov believes that the allegations form part of an ongoing smear campaign related to a power struggle at FIDE in advance of elections taking place this year."
UBS said it could not comment on whether individuals or organisations were clients of the bank.
"We can't comment on whether individuals or organizations are clients of UBS. We follow all laws and regulations that are applicable to us," UBS said.
Last March, Ilyumzhinov accused FIDE of an attempted "revolution" to oust him by falsely announcing his resignation. He said he intended to serve his full term and would decide this year whether to run for re-election in September.
FIDE, whose secretariat is based in Athens, says it transferred presidential powers to Ilyumzhinov's deputy in December 2015 though its website still lists Ilyumzhinov as president.
"The Swiss Bank UBS has announced that they will immediately close our accounts," FIDE's treasurer, Adrian Siegel, said in a Feb. 12 letter posted on its website.
"The white money strategy in Switzerland does not allow to do business with institutions or persons on the sanction list of the U.S. Department of the Treasury. Thus, it was only a question of time until we face this serious problem."
Siegel said FIDE had so far been allowed to keep its accounts because Ilyumzhinov had informed FIDE on several occasions that he would soon be removed from the sanctions list.
(Reporting by Karolina Tagaris in ATHENS, Michael Shields in ZURICH and Maxim Rodionov in MOSCOW; Editing by Mark Bendeich)
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