(CNSNews.com) – Amid ongoing questions about the administration’s decision to send Iran $1.7 billion – in cash – in settlement of a legal claim early this year, lawmakers on Wednesday will continue to press for answers about a payment many still view as a “ransom” for the release of American prisoners.
Among other things, congressional critics are focusing on concerns that sending Iran the large sum in cash has made it easier for the money to be used to finance terrorism.
A hearing Wednesday morning of the Senate Banking subcommittee on national security and international trade and finance is entitled, “Terror Financing Risks of America’s $1.7 Billion Cash Payments to Iran.”
Witnesses include former Attorney General Michael Mukasey; former undersecretary of defense for policy Eric Edelman, who is counselor at the Center for Strategic and Budgetary Assessments; and Suzanne Maloney, an Iran expert at the Brookings Institution in Washington.
Terror financing is in the purview of the Financial Action Task Force (FATF), an international body set up in 1989 to combat money laundering but tasked after 9/11 to counter terrorist financing.
The FATF has warned that transactions in cash can facilitate terrorism.
“[T]he physical cross-border transportation of currency … is one of the main methods used to move illicit funds, launder money, and finance terrorism,” the FATF said in a 2010 best practices guide, quoted this week by Eric Lorber, a senior advisor at Foundation for Defense of Democracies’ Center for Sanctions and Illicit Finance.
The money in question was $400 million in formerly frozen Iranian funds, whose handover coincided with the release of imprisoned Americans and the implementation day of the Joint Comprehensive Plan of Action (JCPOA) nuclear deal. An additional $1.3 billion in interest was paid over the ensuing weeks.
It was reported earlier that Iran directed the money to its military budget. Last week an analyst said it was possible that more than $1 billion of the $1.7 billion total could go towards sponsoring terrorism via the Islamic Revolutionary Guard Corps.
The administration – which continues to deny that the money amounted to a ransom – has said it had no choice but to pay it in cash, because sanctions had cut Iran off from the international finance system.
“The reason that we had to give them cash is precisely because we are so strict in maintaining sanctions and we do not have a banking relationship with Iran that we couldn’t send them a check and we could not wire the money,” President Obama said on August 4.
But that explanation has been called into question by new revelations that it had in fact wired another sum of money to Iran, around six months earlier.
“So was this gross incompetence, or was it purposeful deception?” the House Foreign Affairs Committee asked in a blog post on Monday. “The American people deserve honest answers.”
“The United States has a longstanding policy not to pay ransom, because it puts bigger targets on the backs of Americans overseas,” the committee said. “In the months since the White House forked over pallets of untraceable cash, Iran has accelerated its illicit ballistic missile program and seized at least three more Americans.”
Experts have pointed out that despite the sanctions, U.S. law does allow exceptions when it comes to the settling of legal disputes between the U.S. and Iran. Some believe the Iranians may themselves have insisted the money be provided in the form of cash.
Tzvi Kahn, a senior policy analyst at the non-profit Foreign Policy Initiative (FPI) in Washington, wrote Tuesday that “the circumstances surrounding the payment suggest that the Iranian regime likely demanded a cash payment – and that the administration, eager to secure the release of hostages in time for the nuclear deal’s Implementation Day, hurriedly consented to its demands.”
Last week the House Foreign Affairs Committee passed a bill, introduced by Chairman Rep. Ed Royce (R-Calif.), declaring it to be U.S. government policy “not to pay ransom or release prisoners for the purpose of securing the release of U.S. citizens taken hostage abroad.”
The bill would also prohibit the government from “providing promissory notes (including currency) issued by the U.S. government or by a foreign government to the government of Iran.”
The Committee on Rules is due to discuss the measure on Wednesday, ahead of full House consideration.
Meanwhile Senate Finance Committee chairman Orrin Hatch (R-Utah) wrote to the Treasury Department last week, asking specific questions about the $1.7 billion payment to Iran, including questions on procedures for payment. Hatch asked for evidence that none of the money had gone to individuals or entities that promote terrorism
Hatch wants answers from the department’s inspector general, Eric Thorson, by October 12.