WASHINGTON - The Obama administration is acknowledging its transfer of $1.7 billion to Iran earlier this year was made entirely in cash, using non-U.S. currency.

A Treasury spokeswoman says the cash payments were necessary because of the "effectiveness of U.S. and international sanctions," which isolated Iran from the international finance system.

The $1.7 billion was the settlement of a decades-old arbitration claim between the U.S. and Iran. An initial $400 million cash delivery was sent Jan. 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 $1.3 billion represented estimated interest on the Iranian cash the U.S. had held since the 1970s.