FILE PHOTO: The headquarters of Turkey's Denizbank is pictured in Istanbul, Turkey March 2, 2016. REUTERS/Murad Sezer/File Photo

ISTANBUL (Reuters) - Turkey’s Denizbank said on Thursday it did not have any dealings with the shipping group owned by gold trader Reza Zarrab, who is testifying in a U.S. federal court after pleading guilty to conspiring to evade U.S. sanctions against Iran.

Zarrab on Wednesday told the court that he helped Iran use funds deposited in Turkey’s state-owned Halkbank to buy gold, which was smuggled to Dubai and sold for cash. Halkbank has said all of its transactions complied with national and international regulations.

According to local media reports, Zarrab also testified that he used Denizbank for some transactions.

Denizbank disputed the reported allegations.

“Our transactions only revolved around buying and selling gold domestically, and there were no foreign transactions,” it said in a statement. “Our bank... has had no dealings with the Royal Shipping group owned by Reza Zarrab.”

The case has fueled tensions between the United States and Turkey, which are NATO allies. Turkish President Tayyip Erdogan’s government has said the case was fabricated for political reasons.

Turkey’s banking regulator last month denied a local media report that six Turkish lenders could face substantial fines from the United States over alleged violations of Iran sanctions.

(Corrects third paragraph to show that sourcing for Zarrab’s testimony on Denizbank is local media reports)