UK and Saudi Arabia security services are investigating links between two al-Qaeda suspects and the 7 July London bombings, the Saudi ambassador says.
UK and Saudi intelligence are both investigating, said the ambassador
But Prince Turki al-Faisal said it was too early to confirm whether cash was wired to the UK or text messages were sent from al-Qaeda suspects in Saudi.
"It is under investigation by both your security forces and our security forces," he said.
The Sunday Telegraph reported a link to two Moroccan men killed in shoot-outs.
There had been security co-operation "for some time", Prince al-Faisal told BBC News.
Saudi and British intelligence had participated in an "intensive exchange of information on terrorism" over the past few years.
"We've had very close co-operation between the two security forces for a long time," he said, "even at the time when I was director of intelligence more than five years ago."
Money transfers are believed to have been made from Saudi Arabia to the UK in the first six months of the year through businesses in the two countries, the Sunday Telegraph has reported.
It says that the investigations revolve around two Moroccans said to be senior figures in al-Qaeda and both killed in separate shoot-outs in Saudi Arabia in the weeks before 7 July.
The Observer also reports that calls to the UK from one of the men's mobile phones were intercepted.
Neither the Foreign Office nor the Home Office have commented.