The US Federal Reserve is not involved in clearing payments made by India to Iran to pay some of its dues for oil bought from the West Asian country, a US Treasury Department spokeswoman said.
The comment was in response to a June 19 Reuters story citing sources with knowledge of the matter as saying that India planned to clear some oil payments to Iran through the United Arab Emirates central bank.
According to the sources, the new payment system includes a step in which funds would be routed through the Federal Reserve.
"We can confirm that no US financial institutions, including the US Federal Reserve Bank, will be or have been involved in this payment installment," the spokeswoman
An interim nuclear deal has allowed Tehran access to $4.2 billion in blocked funds globally.
The payments are to reward Tehran for cooperating in nuclear talks that, if successful, would pave the way for Iran to return to the international fold after decades of isolation.
Asian buyers such as Japan and South Korea have cleared some of their oil dues as per a payment schedule approved by world powers in a breakthrough deal with Iran in November.
The payment is spread over eight installments, ranging from $450 to $650 million each, from February to July.
India is slated to take up the last three tranches of $550 million each.
The payments are linked to Iran making continuous cuts in its nuclear programme.