In April, China appealed to Washington to avoid damaging business confidence following the Wall Street Journal report that US authorities were investigating whether Huawei violated sanctions on Iran amid spiraling technology tensions.
Wanzhou, the daughter of the technology giant's founder Ren Zhengfei, faces extradition to the USA on suspicion that the executive violated US sanctions targeting Iran.
The Canadian Justice Department arrested Wanzhou Meng in Vancouver on Saturday and U.S. officials want Canada to extradite her, agency representative Ian McLeod said in an email sent to Business Insider.
According to a statement from the Department of Justice, Meng was arrested in Vancouver on Saturday and is being sought for extradition by the United States.
McLeod says as there is a publication ban in effect and he could not provide any further details.
The Wall Street Journal reported earlier this year that USA authorities are investigating whether Huawei violated sanctions on Iran.
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Several months after Donald Trump signed a bill into law preventing USA government agencies from buying certain products from the Chinese electronics manufacturer, Huawei's CFO has been arrested in Canada. "The ban was sought by Ms. Meng", continued the statement. She is also the daughter of the company's founder, Ren Zhengfei.
United States officials have been investigated Huawei over alleged violations of the country's sanctions on Iran and are seeking to extradite Meng.
Meng's arrest comes as Ottawa and Beijing have been engaged in exploratory talks on a free trade agreement for the past two years, which would be the first deal of its kind between China and a western country.
The US later replaced the ban with a fine and governance changes.
Huawei, among the world's largest telecommunications equipment makers, has previously stated it abides by "all applicable laws and regulations where it operates, including the applicable export control and sanction laws and regulations of the UN, US and European Union".
For the same reason, Australia's government blocked China's telecom giant Huawei from its 5G mobile network last summer.
GCSB Minister Andrew Little said the decision to turn down the overseas network provider was because the technology was too risky - not because the company is Chinese.