Seoul is taking steps to release Iranian funds held in Korea due to U.S. sanctions on Tehran, according to local media reports on Friday.

It is part of an agreement reached between the United States and Iran to free Americans in exchange for jailed Iranians and Tehran’s access to around $6 billion in frozen funds in Korea.

Korea is “in the process of unfreezing the Iranian assets that have been frozen in Korea” due to the U.S. sanctions, said a senior government official, according to a report from the Korea Economic Daily. “That will significantly help normalize the strained relations between Korea and Iran.”

Some $7 billion in Iranian assets have been frozen at the Industrial Bank of Korea and Woori Bank since September 2019, when U.S. sanction waivers for Korea’s imports of Iranian oil expired.

Under the U.S.-Iran agreement, the United States will transfer nearly $6 billion of Iran’s oil revenue held in Korea, putting the funds into an account in the central bank of Qatar, according to a report from the New York Times on Thursday.

Iran will only be able to gain access to the money to pay for humanitarian purposes, including medicine and food.

In exchange, Iran agreed to allow four detained U.S. citizens to move into house arrest from Evin, one of the most notorious prisons in Tehran. A fifth was already under home confinement.

“The process of releasing billions of dollars of Iranian assets, illegally seized by the U.S. for several years, has commenced,” Ali Bagheri Kani, Iranian deputy foreign minister and chief nuclear negotiator, wrote on Twitter on Friday.

“Tehran has received the guarantee of Washington’s commitments. The release of several Iranians who were illegally detained in America is in this context.”

Korea’s Ministry of Foreign Affairs refused to confirm any details on the matter.

“There isn’t anything specific we can confirm at this point,” said the foreign ministry following the report on U.S.-Iran agreement. “Our government has been closely negotiating with the United States, Iran and the related countries on resolving the frozen assets, and we expect the issue to be resolved amicably.”

Bilateral relations between Korea and Iran have frayed in recent years due to the Iranian assets held in Seoul. The relations aggravated after President Yoon Suk Yeol said the biggest enemy and threat of the United Arab Emirates (UAE) is Iran during his visit to the UAE in January.

BY JIN MIN-JI [jin.minji@joongang.co.kr]