By Jeremy Scott-Joynt BBC News Online business reporter

Dollars, not dinars, are being hunted by the US

The move is prompted in many cases by fear of America's power to blacklist institutions and countries from doing deals with US organisations or in US dollars, BBC News Online has been told.

Swiss bank UBS said on Monday it would hand over to the US Treasury assets it has frozen since Saddam Hussein's invasion of Kuwait in 1990, in accordance with United Nations Security Council resolution 661.

The US is demanding the estimated $648m in Iraqi assets held outside its borders, most of it in the UK, should be handed over.

And it has called on other countries to help in what US Treasury Secretary John Snow called a "worldwide hunt for blood money".

Still in the US

If it was France, the US would definitely be playing hardball Kern Alexander Judge Institute of Management Studies

As far as UBS is concerned, the funds it is holding are without question under US jurisdiction.

The money, UBS spokesman Serge Steiner told BBC News Online, stems from payments made by US oil companies, destined for Iraqi counterparts and trapped in the US by resolution 661 in 1990.

"Because of that, of course we will comply with what the US authorities want of us," he told BBC News Online.

He declined to say how much money there was in its coffers.

Nor would he speculate on how different the position might be if the money was in Switzerland, which has already said it cannot act without a fresh UN Security Council resolution.

Blacklisted

The US has made no bones about threatening those who do not co-operate.

The Patriot Act, introduced in the wake of 9/11, gives the government the power to confiscate any property under US jurisdiction if he believes it is necessary for national security.

Gordon Brown is backing the US drive to the hilt

That includes any inter-bank transaction using US dollars - each of which has formally to be cleared through the New York Federal Reserve - as well as any assets on US soil.

So any company which has contracts with Iraqi state organs is potentially at risk if it has any money in US banks or denominated in US dollars, according to Kern Alexander, Senior Research Fellow in International Financial Regulation at Cambridge University's Judge Institute of Management Studies and an expert on the Patriot Act.

"There used to be a rule that the government had to say there was a direct relationship between the assets they were seizing and the activity being punished", Mr Alexander told BBC News Online.

"Now they don't have to provide any direct connection, so if you've got an unrelated manufacturing plant in Michigan or you're a natural gas firm with an office in Houston, you're out of luck."

Falling in line

With this fear of being cut off from the US financial system in mind, European countries are beginning to signal their willingness to investigate whether they can comply.

Saddam Hussein's money is said to be secreted around the world

In line with the UK's staunch backing for the US-led war on Iraq, Chancellor Gordon Brown said on Saturday that he would take "whatever steps are necessary" to follow the US lead.

A spokesman told BBC News Online that while the UK could not act yet, one option - assuming a US-UK victory - might be a UN Security Resolution transferring the Iraqi regime's assets to whatever new government replaced it, as was done with Taliban assets in Afdghanistan.

And a spokesman for the Netherlands Finance Ministry told BBC News Online that although the government had been "a little surprised" by the request, it was examining how it might be legally possible to fall in line.

That could prove highly problematic, since the European Convention on Human Rights bans seizure without due process.

Russia, on the other hand, has flatly refused to co-operate.

France, incidentally, is thought to have no Iraqi assets to speak of, despite the close relationship between some French companies and Iraq.

That, Mr Alexander said, is lucky for France, given the stormy relationship it currently enjoys with the US.

"When you're dealing with allies, usually a quiet diplomatic word can help smooth out the legal difficulties," he said.