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WASHINGTON. — The Obama administration acknowledged late on Tuesday that its transfer of $1.7bn to Iran earlier this year was made entirely in cash, using non-US currency, as Republican critics of the transaction continued to denounce the payments.

Treasury Department spokeswoman Dawn Selak said in a statement the cash payments were necessary because of the “effectiveness of US and international sanctions,” which isolated Iran from the international finance system.

The $1.7bn was the settlement of a decades-old arbitration claim between the US and Iran.

An initial $400m of euros, Swiss francs and other foreign currency was delivered on pallets January 17, the same day Tehran agreed to release four American prisoners.

The Obama administration had claimed the events were separate, but recently acknowledged the cash was used as leverage until the Americans were allowed to leave Iran.

The remaining $1.3bn represented estimated interest on the Iranian cash the US had held since the 1970s. The administration had previously declined to say if the interest was delivered to Iran in physical cash, as with the principal, or via a more regular banking mechanism.

Earlier Tuesday, officials from the State, Justice and Treasury departments held a closed-door briefing for congressional staff on the payments, according to a Capitol Hill aide familiar with the session.

The officials said the $1.3bn was paid in cash on January 22 and February 5.

The aide was not authorised to speak publicly and requested anonymity.

The money came from a little-known fund administered by the Treasury Department for settling litigation claims.

The so-called Judgment Fund is taxpayer money Congress has permanently approved in the event it’s needed, allowing the president to bypass direct congressional approval to make a settlement. The US previously paid out $278m in Iran-related claims by using the fund in 1991.

Republicans have decried the payments as ransom, a charge the Obama administration has rejected. On Tuesday, a group of Republican senators announced their support for legislation that would bar payments from the Judgment Fund to Iran until Tehran pays the nearly $55.6bn that US courts have judged that it owes to American victims of Iranian terrorism.

“President Obama’s disastrous nuclear deal with Iran was sweetened with an illicit ransom payment and billions of dollars for the world’s foremost state sponsor of terrorism,” said Sen. Marco Rubio, the bill’s primary sponsor. Rep. Ed Royce, the chairperson of the House Foreign Affairs Committee, also introduced a bill that prohibits cash payments to Iran and demands transparency on future settlements.

“All of this was done in secret, hidden from the American people and from Congress,” Royce said of the cash payments to Iran.

Both the House and Senate are planning to hold hearings on the payments. — AP.