The ANZ bank has allegedly blocked 100,000 US dollars of Iranian funding to Solomon Islands, earmarked for 25 students to fly to Cuba to become doctors.
Solomon Islands does not have a formal diplomatic relationship with Iran but has been courting Tehran since last year.
The Solomon Star newspaper reports that Prime Minister Dr Derek Sikua's government approached Iranian officials in New York for help in paying for the students' flights to Cuba.
Under the scholarship program, 50 Solomon islanders are already studying to become doctors in Cuba.
The newspaper accused the Australian government of blocking the funds but international banking agreements stop large sums of money being moved around by regimes like Iran.
An ANZ spokeswoman said the bank complies with international sanctions.
She says as part of ANZ's economic and trade sanctions policy, ANZ will not undertake remittances or transactions, in any currency, directly or indirectly, involving Iran, Sudan, Syria, North Korea, Myanmar or Cuba.
The Solomon Islands prime minister's spokesman and Foreign Affairs officials did not answer AAP's questions related to the money or their diplomatic relations with Iran.
