US Grants Sanctions Exemption for Transfers of 'Frozen Iranian Funds' to South Korea

by Lee Jieun

Published 12 Sep.2023 07:15(KST)

The U.S. government has exempted related sanctions to allow the transfer of approximately $6 billion in frozen Iranian oil payment funds held in South Korea, in exchange for the release of American detainees, according to reports by AP and Bloomberg on the 11th (local time).

[Image source=Reuters Yonhap News]

According to the reports, the Biden administration notified Congress on the same day of its decision to exempt related sanctions so that foreign banks can transfer the frozen Iranian funds from South Korea to Qatar without concerns about U.S. sanctions.

Previously, the U.S. agreed to allow the transfer of $6 billion in frozen Iranian funds deposited in South Korean banks to Qatar on the condition that Iran release five Americans it was holding, enabling Iran to use the funds for humanitarian purposes such as purchasing medicine.

The frozen funds are payments Iran received for exporting oil to South Korea, which have been stuck in South Korea since 2019 due to U.S. sanctions on Iran that blocked financial transactions. Iran had caused conflicts by seizing South Korean vessels in the Strait of Hormuz, which borders Iran, demanding the return of these funds.

This sanctions exemption applies to banks located in South Korea, Qatar, Germany, Ireland, and Switzerland that are involved in sending the frozen funds in South Korea to the Central Bank of Qatar.

AP reported that the purpose of this sanctions exemption is to reassure European countries that were reluctant to participate in the transfer of frozen funds due to concerns about violating U.S. sanctions on Iran.