A senior Obama administration official told lawmakers Tuesday that Iran will not be given access to the U.S. financial system as part of the sanctions relief granted under the landmark nuclear deal.

State Department Undersecretary for Political Affairs Thomas Shannon, Jr., testifies on Capitol Hill in Washington, Tuesday, April 5, 2016, before the Senate Foreign Relations Committee hearing on recent Iranian actions and implementation of the nuclear deal. (AP Photo/Andrew Harnik)

Testifying before the Senate Foreign Relations Committee, Thomas Shannon, the undersecretary of state for political affairs, said reports that Iran would be allowed to deal directly with U.S. banks are inaccurate.

"The rumors and news...that the U.S. preparing to...allow Iran access to the U.S. financial system are not true," Shannon said.

Shannon said the U.S. is clarifying regulations that allow Iran to access money being made available to it after the sanctions were lifted when implementation of the deal began in January.

The Associated Press reported last week that the Treasury Department has prepared a general license that would permit offshore financial institutions to conduct foreign currency trades in dollars in support of legitimate business with Iran.

No final decision has been made on the license prepared and several restrictions would apply. The license would not give Iran access to the U.S. financial system and it would not allow Iran itself to conduct business in American dollars.

But the change could prove significant for Iran's sanctions-battered economy. It also would be highly contentious in the United States, where Republican and several Democratic lawmakers say the administration promised to maintain a strict ban on dollars along with other non-nuclear penalties on Iran after last July's seven-nation agreement that is designed to prevent Iran from becoming a nuclear power.

Sen. Bob Corker, R-Tenn., the committee's chairman, said he's received conflicting reports over the Iranian access issue. He said he spoke Monday evening with the Treasury Department's sanctions chief, Adam Szubin, who he said was "very reassuring that we are doing nothing to accommodate dollar transactions." But Corker said remarks Tuesday morning on MSNBC by Secretary of State John Kerry seemed to indicate otherwise.

"So, I felt very reassured yesterday in talking to Adam that we were not `U-turning' U.S. dollars, (that) we were not going to be involved in helping them, if you will, outside the agreement," Corker said. "And yet, this morning, it seemed that Secretary Kerry indicated that we were."

The committee's hearing was held amid the reports that the administration may relax the prohibition that prevents U.S. dollars from being used in transactions with Iran. Angry lawmakers, who contend the U.S. was taken advantage of in the deal, have countered that Tehran would be getting more than it deserves from the international nuclear pact reached last year.

The nuclear pact provided Iran with billions of dollars in sanctions relief for curtailing programs that could lead to nuclear weapons. But the Iranians say they haven't benefited to the extent envisioned under the deal because of other U.S. measures linked to human rights, terrorism and missile development concerns.

Shannon told the committee said the administration is "encouraged" so far by Tehran's adherence to its nuclear commitments mandated by the accord, which is designed to prevent Iran from becoming a nuclear power. But he said it shares the concerns expressed by members of Congress over Iran's "destabilizing activities in the Middle East and its human rights abuses at home."

He listed Iran's support for extremist groups like Hezbollah, its assistance to the regime of Syrian President Bashar Assad and the Houthi rebels in Yemen, and its ballistic missile program as all being at odds with U.S. interests.

Republicans on Capitol Hill remain highly critical of the Obama administration's efforts to punish Iran for what they have called repeated violations of a U.N. ballistic missile test ban.

A group of Republican senators last month unveiled legislation that requires the administration to sanction every sector of Iran's economy that supports the country's ballistic missile program. The bill, introduced by Sen. Kelly Ayotte, R-N.H., is a reflection of longstanding exasperation among GOP lawmakers who've complained that President Barack Obama has failed to properly penalize Tehran for test-firing ballistic missiles.

Iran's Revolutionary Guard test-fired two ballistic missiles on March 9 and U.S. officials said the launches were in defiance of the U.N. resolution, which calls for Tehran not to launch any ballistic missiles capable of delivering a nuclear weapon.

The administration in January announced sanctions against Tehran for missile firings in late 2015, but Republicans called those measures tepid and weak. In late March, following the most recent launches, the Treasury Department issued new penalties against two Iranian companies involved in Iran's ballistic missile program and several people and firms from Britain and the United Arab Emirates for helping the U.S.-blacklisted Mahan Air evade sanctions to secure American plane parts and financing.

Shannon called Iran's attempts to develop increasingly advanced ballistic missile systems "a threat to regional and international security."

(Copyright 2016 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.)


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