U.S. Secretary of State John Kerry on Thursday admitted that some of the $55 billion in sanctions relief that will be released to Iran under the nuclear deal will ultimately end up in the hands of terrorists.

“I think that some will end up in the hands of the IRGC or of other entities, some of which are labeled terrorists,” Mr. Kerry said in an interview with CNBC, using an acronym for Iran’s Islamic Revolutionary Guard.

“You know, to some degree, I’m not going to sit here and tell you that every component of that can be prevented, but I can tell you this,” Mr. Kerry continued. “Right now, we are not seeing the early delivery of funds going to that kind of endeavor at this point in time. I’m sure at some point some of it will.”

He argued that Iran, which is one of the largest state sponsors of terrorism in the world, has a relatively small defense budget compared to other gulf states.

“The Saudis alone spend $80 billion a year on defense. The entire Gulf State community spends $130 billion a year on defense. Iran spends $15 billion a year on its military activities. So it’s so incredibly disproportionate,” Mr. Kerry told CNBC.

“I believe that working with our Gulf State partners, which we are going to do and which we are upgrading, we have the ability to guarantee that they will be secure, that we will stand by them, even as we look for this potential of a shift in behavior,” he said.

A report from the Congressional Research Service last year revealed that Iranian funding for terrorist groups including Hamas and Hezbollah could be much greater than originally estimated. Some regional experts claim that Iran’s defense budget could actually be as much as $30 billion and that much of that spending goes unreported, including support for foreign terrorists organizations such as Hamas and Hezbollah.