The Obama administration orchestrated a "money laundering operation" on Iran’s behalf, Sen. Ted Cruz (R., Tx.) told the Washington Free Beacon on Thursday following testimony by top U.S. officials who disclosed that the Islamic Republic forced the United States to pay $1.7 billion in cash prior to the release of several American hostages.

Senior Obama administration officials, under the threat of a subpoena, were forced to appear on Capitol Hill early Thursday to face questions about the circumstances behind a $1.7 billion cash payment to Iran that has been widely viewed as a ransom.

Under questioning from lawmakers, officials from the State, Treasury, and Justice Departments said Iran insisted the money be paid out in cash by the United States prior to the release of several U.S. hostages.

"Iran had to have it in cash," Paul Ahern, assistant general counsel for enforcement and intelligence at the Treasury Department, told lawmakers. "Iran was very aware of the difficulties it would face in accessing and using the funds if they were in any other form than cash, even after the lifting of sanctions."

A cash delivery "was the most reliable way that they received the funds in a timely manner and it was the manner preferred by the relative foreign banks," Ahren said.

Cruz, a leading critic of the administration’s diplomacy with Tehran, expressed outrage at this admission, telling the Free Beacon that the Obama administration is guilty of laundering U.S. funds for Iran.

"This testimony only confirms what reasonable people had already concluded about the Obama administration’s cash transaction with the Islamic Republic of Iran: This was a ransom paid to a rogue regime determined to spend it on terrorist attacks on America and our allies," Cruz said.

"The mullahs wanted cash so it would be immediately accessible and untraceable, and the administration agreed because they didn’t want there to be proof the Iranians were using it for terrorism. It was, essentially, a money laundering operation," Cruz added.

Top administration officials said Iran would not provide a guarantee that the money would not be spent on terrorism operations.

The cash was delivered to Iranian officials in Europe and then brought back to Tehran, officials said.

After converting the U.S. funds into European bank notes and cash, the money was given to an "official from the Central Bank of Iran for transfer to Tehran," according to Ahern, who explained that "the funds were under U.S. government control until their disbursement."

The remaining $1.3 billion was withdrawn from a U.S. taxpayer fund operated by the Treasury Department and sent to Europe. Once there, the money was converted into foreign currency and transferred to a representative of Iran’s central bank on Jan. 22 and Feb. 5.

The administration officials only agreed to testify before Congress after being threatened with a subpoena. Lawmakers on the House’s Financial Services Committee disclosed that the administration has so far failed to produce key documents pertaining to the cash payment.

When asked if Iran was forced to provide "guarantees the money would not be used for terrorism," a top State Department official said it was not.

"I’m not aware of any guarantees," stated Christopher Backemeyer, a deputy assistant secretary for Iranian affairs at the State Department.