Mustafa Zarti, the former deputy head of Libya's sovereign wealth fund, has claimed he has been vindicated after the European Union unblocked his accounts that had been frozen by authorities hunting for the offshore wealth of Muammar Gaddafi's inner circle.

"This is a victory for the rule of law. The sanctions were unjustified from the beginning," Zarti was quoted by Reuters as saying via a statement read by a spokesperson in Vienna, where the money manager headed in February this year in a break with Libya's ruling elite.

The development highlights how Europe’s private banking system is on the alert for potentially suspicious sources of funds coming from the Middle East and North Africa at a time when the MENA region has been rocked by the so-called “Jasmine Revolution” wave of political unrest and violence in countries such as Tunisia, Egypt, Libya, Bahrain, Syria and Morocco.

Zarti reportedly reiterated his claim that Austria's foreign ministry had decided to slap sanctions on him solely based on media reports falsely portraying him as Gaddafi's money man.

A notice in the European Union's official journal on Friday said that "in view of the developments in Libya" Zarti had been removed from the blacklist of people and organisations whose assets were frozen because of suspected links to Gaddafi.

Zarti has said he resigned on 24 February from the Libya Investment Authority wealth fund, three days after coming to Austria to spend a holiday break with his family.

Zarti, who has an Austrian passport and lived for years in Vienna as a youth, has denied any links to the Libyan leader's clan other than Gaddafi's son Saif al-Islam, a long-time friend.