US, S. Korea Discuss Iran's Blocked Assets

Top economic officials from South Korea and the United States reached agreement over cooperating on the issue of Iran's funds frozen in Seoul, the South Korean Finance Ministry said.
South Korea's Finance Minister Hong Nam-ki and US Treasury Secretary Janet Yellen met in Venice Friday on the sidelines of the Group of 20 meeting of top finance and economic officials.
According to Yonhap News Agency, South Korea is seeking to use a Swiss channel backed by the US in a bid to use part of the money for Swiss companies' sale of humanitarian items to Iran.
Iran has called on Korea to unlock more than $7 billion of its forex assets held due to the US economic blockade, stressing that unlocking the assets is a priority in mutually respectful bilateral ties.  
Officials in Seoul said last month they were in talks with Washington on ways to release the money without violating the unilateral US sanctions.
The East Asian country had earlier agreed to release $1 billion of the assets -- a deal apparently foiled by US obstructionism.
Following talks with the South Korean ambassador to Tehran in February, the former head of the Central Bank of Iran, Abdolnasser Hemmati, said the two sides had reached agreement on using "part" of Iran’s forex assets held in that country.
Soon after, the foreign ministry in Seoul said the assets would be released after consultations with the Americans. Unnamed foreign ministry officials then told Korean news outlets that Washington had “agreed in principle” on the partial transfer of Iranian funds to Switzerland, from where it could be used via the Swiss Humanitarian Trade Arrangement (SHTA).
Last month the CBI said 200 million yuan ($31.2 million) in blocked forex in South Korea had been used for importing the Covid vaccines.

A Secure Channel

SHTA was created to ensure that Swiss-based exporters and trading companies in the food, pharmaceutical and medical sectors would have a secure payment channel with a Swiss bank through which payments for their exports to Iran are guaranteed.
It was set up in January 2020 after the US Treasury Department granted waivers for using a portion of the CBI’s overseas resources to import basic goods and pharmaceuticals.
The BCP Bank of Switzerland was reportedly authorized to handle SHTA transactions.
South Korea was a major buyer of Iranian oil before the sanctions. Home to a massive refining industry, the country is the world’s fifth-largest oil importer. Before the latest US restrictions Iran accounted for almost 15% of Korea’s oil imports.
After the US restricted the use of dollars for transactions with Iran, the CBI created new accounts with South Korean commercial banks to facilitate trade in the Korean won.
The two countries used the accounts based on the Korean currency to continue Korea's import of oil from and its exports of goods to Iran. Those accounts were also frozen after the Trump administration tightened sanctions on Iranian oil exports in 2018.
Besides South Korea, Iran's central bank has been holding talks with several other countries in which Iranian assets are blocked, including Oman, Iraq and Japan.