The Obama administration used a bank to pay for a multi-million dollar purchase of nuclear-related material from Iran, undermining the government's claim that an unrelated $1.7 billion payment to the Islamic Republic had to be made in cash, according to a top lawmaker and congressional sources who spoke to THE WEEKLY STANDARD.

The manner in which Iran has received money from the United States—whether through financial institutions or hard currency—has received attention from critics who say that cash could easily be used to finance terrorism.

House Foreign Affairs Committee chairman Ed Royce said Wednesday that a U.S. purchase of heavy water from Iran earlier this year that was intended to help the Islamic Republic comply with the nuclear deal "flowed through the formal financial system—a bank." Heavy water is a material used in the production of weapons-grade plutonium, and it is not produced stateside. The Wall Street Journal reported the purchase in April.

The revelation comes as the administration battles congressional criticism of a $1.7 billion cash transfer to Iran, the first $400 million installment of which occurred as the country released American prisoners in January. The nature of the transaction spurred criticism that the administration caved to Iranian demands to receive the payment in cash.

Administration officials including President Obama have defended the payment by saying that cash was the only way to reliably transfer money to Iran. But Royce said on Wednesday that the heavy water deal showed "if the administration wanted to pay [the $1.7 billion] through a bank, it could have."

Royce did not specify whether the payment for the heavy water, which was estimated at $8.6 million, occurred entirely or only partially through formal financial channels.

A congressional source who works closely on the heavy water issue expressed outrage about the new details, telling TWS that lawmakers have been trying to get more information about the payment for months.

"Lawmakers pounced on the administration when it announced it was spending millions of taxpayer dollars on Iranian nuclear material. Members asked detailed questions, held hearings, and even passed legislation blocking the purchase," the source said. "Months later, President Obama now finds it convenient to reveal some details about the transaction, though contradicts his previous statements in doing so. This is why Congress and the American people are so skeptical about everything Iran-related."

Kansas congressman Mike Pompeo sent a letter to the Treasury Department in April asking about the purchase. The government didn't respond until June 8, and its reply did not explain the method of payment. Officials told THE WEEKLY STANDARD in July that the payment for the 32 tons of heavy water had been made in Euros, but refused to disclose how the money was transferred.

The administration told another lawmaker that the purchase was made "in a manner consistent with OFAC's Iran regulations," using an acronym for the Office of Foreign Assets Control, a division of the Treasury Department tasked with enforcing sanctions. At the time of publication, the Treasury Department had not provided comment in response to several inquries from TWS about Royce's remark on Wednesday.

The House passed bipartisan legislation in July that would prohibit the future purchase of heavy water from Iran with federal funds.

Jeryl Bier contributed reporting.