U.S. allows release of frozen Iranian funds in "critical step" for prisoner swap deal

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Secretary of State Tony Blinken last week signed a waiver to allow banks to transfer $6 billion in frozen Iranian funds without the fear of being harmed by U.S. sanctions, the State Department said on Monday.

Why it matters: The move is a “critical step” for a prisoner swap deal between the U.S. and Iran to move forward, the State Department said.

The swap is expected to include the release of five Iranian Americans, including Siamak Namazi, Morad Tahbaz, Emad Shargi and two unnamed individuals. The five were moved from Iranian prisons last month and placed under house arrest.

Driving the news: Blinken signed the sanctions waiver on Sept. 8, and notified Congress of the move on Monday, as first reported by AP.

The State Department in a statement stressed that the money will not reach Iran but will be moved from banks in South Korea, where the funds have been held, to a bank account in Qatar that the Iranian government will be able to access it to buy food and other humanitarian goods.

“These funds will be moved to restricted accounts in Qatar, and the United States will have oversight as to how and when these funds are used,” a State Department spokesperson said.

Yes, but: Some lawmakers expressed concern over the move.

Rep. Michael McCaul (R-Texas), the chairperson of the House Foreign Relations Committee said the Americans held by Iran are “innocent hostages who must be released immediately and unconditionally.”

“However, I remain deeply concerned that the administration’s decision to waive sanctions to facilitate the transfer of $6 billion in funds for Iran, creates a direct incentive for America’s adversaries to conduct future hostage-taking,” he said.

He added that the move by the Biden administration is “demonstrating weakness that only further endangers Americans and freedom-loving people around the world.”

Former President Trump also criticized the move on Truth Social.

What to watch: U.S. officials said the first batch of the funds has already been transferred, but they cautioned the process will take some time to complete.

White House National Security Council spokesperson Adrienne Watson said in a statement that ”what is being pursued here is an arrangement wherein we secure the release of 5 wrongfully held Americans.“

”This remains a sensitive and ongoing process,” she added.

“While this is a step in the process, no individuals have been or will be released into U.S. custody this week. We have kept Congress extensively informed from the outset of this process – long before today – and we will continue to do so, including with additional already scheduled briefings this week.”

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