Last week, the Wall Street Journal reported that the Obama administration had sent $400 million in cash to Iran as part of its $1.7 billion settlement of claims pending before the U.S.-Iran Claims Tribunal in The Hague. The report sparked no insignificant amount of controversy, deserving of comment from both presidential candidates as well as a tough-minded counter from President Obama himself.

Now, though, some – including a former Treasury official – are alleging that the payment constituted a violation of certain U.S. sanctions targeting Iran. Specifically, critics are claiming that the Obama administration violated both the prohibition on the export of goods, services, or technology to Iran, directly or indirectly, (31 C.F.R. § 560.204), as well as the prohibition on evasion of the prohibitions of the Iranian Transactions and Sanctions Regulations, 31 C.F.R. Part 560 (31 C.F.R. § 560.203). As the National Review’s Andrew McCarthy argued, “Obama had our financial system issue U.S. assets that were then converted to foreign currencies for delivery to Iran. Both steps flouted the regulations, which prohibit the clearing of currency of any kind if Iran is even minimally involved in the deal.”

Leaving aside this characterization of the law, the central claim – i.e., that the Obama administration acted in violation of the ITSR – is just plain and simple dead wrong. Indeed, in their rush to defame the Obama administration, critics have lost sight of the fact that certain transactions involving Iran can be either exempt or excepted from the ITSR’s prohibitions and thus permissible as a matter of law. This is the case with the transaction at issue, which was clearly authorized under existing license exceptions to the ITSR.

Specifically, the ITSR contains general license authorization located at 31 C.F.R. § 560.510(d)(2), which authorizes, in relevant part, “all transactions necessary to…payments pursuant to settlement agreements entered into by the United States Government in [] a legal proceeding [involving Iran].” Because the U.S.’s payment to Iran was in settlement of claims pending before the U.S.-Iran Claims Tribunal in The Hague – which, judging by its interminable length, is a legal proceeding if there ever was one – the U.S. government could use this express license authorization to engage in all transactions necessary to make payment pursuant to an agreement entered into with Iran to settle the claims. This includes the transfer of U.S. dollars for foreign currencies and the airlifting into Iran of these foreign currencies (totaling $400 million) in cash. The U.S. government thus did not even require specific license authorization – as was a question posed during last week’s State Department press briefing – as there existed a general license authorizing the payment at issue.

While this license authorization is directly on point, there is a ‘fall-back’ position for the administration as well: 31 C.F.R. § 560.510(a) constitutes a statement of licensing policy, which states that “specific licenses may be issued…to authorize transactions in connection with awards, decisions or orders of the Iran-United States Claim Tribunal in The Hague…; [or] agreements settling claims brought before tribunals…” In other words, the U.S. government has an established policy to grant license requests for payments to Iran to effectuate agreements settling claims before tribunals like the U.S.-Iran Claims Tribunal in The Hague. All that would need to be done is for the U.S. government to license itself to make the payment.

This whole episode brings to bear a useful lesson for those delving into the U.S. sanctions world: the ITSR – like other U.S. sanctions programs – contains just not U.S. sanctions prohibitions, but also exemptions (31 C.F.R. § 560.210) and certain license authorizations and exceptions (Subpart E of 31 C.F.R. Part 560). In order to perform an appropriate legal analysis of transactions like the one reported last week, it is critical to interrogate all these sources of law prior to public condemnation of the administration.