US State Department Wednesday confirmed earlier reports about a change in Iraq’s payment method to Iran for imports of energy, allowing funds to go to non-Iraqi banks.

Reuters reported Monday that Secretary of State Antony Blinken had signed a 120-day waiver under current US sanctions on Iran to allow Baghdad to pay for Iranian energy imports and deposit such payments into non-Iraqi banks in third countries.

State Department spokesman Matthew Miller confirmed the news during his daily press briefing on Wednesday adding that “The one thing that is different about this renewal is that this latest package also expands the waiver to authorize the transfer of funds from those restricted accounts in Iraq to restricted accounts in select third-party banks.”

Miller emphasized that Iran can use the funds in non-Iraqi banks only to buy non-sanctionable goods, which essentially means food and medicine. He explained, “these funds will remain in accounts where they can only be used for non-sanctionable activity, and with every transaction approved in advance by the Department of Treasury.”

At the same time, The Wall Street Journal reported Wednesday that the US Treasury Department and the Federal Reserve Bank of News York have banned 14 Iraqi banks from conducting US dollar transactions.

The report added that US officials acted against these Iraqi banks after uncovering information that they engaged in money laundering and fraudulent transactions, some of which may have involved sanctioned individuals, raising concerns about benefiting Iran.

The decision to allow Iraqi payments to be transferred to non-Iraqi banks could be related to long-standing suspicions of Iranian money-laundering efforts to transfer US dollars to Iran, which is short of hard currencies.