The world governing body of chess has had its financial dealings halted amid allegations its scandal-hit president facilitated the funding of Islamic State terrorists.

Fide, the Lausanne-based federation which runs the game, disclosed on Tuesday that Swiss bank UBS closed its accounts after finally losing patience with its failure to depose Russian millionaire Kirsan Ilyumzhinov.

Mr Ilyumzhinov, who was once part of Vladimir Putin's inner circle, was placed on a US wanted list in November 2015 for allegedly being involved in oil deals which left a financial trail to the terror group Isil via the Syrian government.

But despite repeatedly denying the allegations, and claiming he is the victim of a US-led plot to topple him, Mr Ilyumzhinov has been unable to clear his name.

In a letter published on the Fide website, treasurer Dr Adrian Siegel revealed UBS had shut its bank accounts and the federation faces a "serious problem" paying bills just weeks before the Candidates, its flagship world championship play-off tournament in Berlin which has a prize fund of $460,000.

Dr Siegal laid the blame squarely on Ilyumzhinov, saying the allegations "severely damaged Fide's business activities".

"It was only a matter of time before we faced this serious problem," he said. "In summary, Kirsan Ilyumzhinov's problems severely damaged Fide's business activities and we have to look for a new banking connection."