New York: The United States insisted Friday that foreign banks should feel free to do business with Iran after Tehran`s compliance with a nuclear deal with world powers.

Secretary of State John Kerry downplayed fears that Asian or European banks could fall afoul of Washington`s continuing sanctions against Iran`s non-nuclear activities.

And, as Kerry met with Foreign Minister Mohammad Javad Zarif for the second time in a week, Washington itself agreed to buy 32 tonnes of Iranian heavy water.

These parallel moves in support of non-US trade with Iran will enrage President Barack Obama`s domestic critics, who argue he has already ceded too much ground to Tehran.

"I want to emphasize we`ve lifted our nuclear-related sanctions as we committed to do," Kerry told reporters, sitting alongside Zarif in a New York hotel.

"And there are now opportunities for foreign banks to do business with Iran," he said.

Kerry said that this included those banks that are holding an estimated $55 billion in frozen Iranian assets, who have been nervous about returning the funds even after the deal.

"Unfortunately, there seems to be some confusion among foreign banks and we want to clarify that as much as we can," Kerry admitted.

And, he promised, if banks have questions about the remaining sanctions targeting Iran`s missile program and sponsorship of militant groups, "they should just ask."

Zarif welcomed the statement.

"Iran has implemented its part of the bargain," he said.

"And we hope that with this statement ... that we see serious implementation of all the JCPOA benefits that Iran should derive from this agreement," he added, referring to the deal.

Separately US officials said they would spend $8.6 million to buy Iranian heavy water, even as the nuclear deal came under sustained attack from critics in both countries.

Hardliners in Tehran argue that President Hassan Rouhani has been tricked into surrendering control of Iran`s nuclear program without getting much in return.

And in Washington, Obama`s critics claim he plans to allow an unreformed Iran access to US finance despite the separate sanctions remaining in place.The State Department defended the heavy water deal.

"This transaction provides US industry with a critical product, while also enabling Iran to sell some of its excess heavy water," spokesman John Kirby said.

He said the purchase had come after Iran met its obligations under the nuclear accord implementation process.

And he added: "This material had already been removed from Iran, ensuring it would not be used to support the development of a nuclear weapon."

The heavy water purchase immediately came under attack in Washington as another concession to Tehran and a crack in the wall barring Iran from the US financial system.

"Once again, the Obama administration is handing Iran`s radical regime more cash," declared Ed Royce, chairman of the House foreign affairs committee.

"US purchase of this sensitive material goes well beyond what is required by the nuclear agreement."

House Speaker Paul Ryan did not mince his words.

"This purchase -- part of what appears to be the administration`s full-court press to sweeten the deal -- will directly subsidize Iran`s nuclear program," he said.

"It`s yet another unprecedented concession to the world`s leading state-sponsor of terrorism."

But a US official, speaking on condition of anonymity, insisted to AFP the transaction did not break any rules.

"Regardless of whether or not this is in US dollars, this licensed transaction is limited in scope," he said.

"This routing through third-country financial institutions is similar to the mechanism that has been used for years to allow other authorized transactions," he said.Kerry admitted this week that Iran has thus far been able to access only around $3 billion of the $55 billion the State Department estimates that it is owed.

US sanctions still exist to punish Iran for its missile program and sponsorship of Middle East "terrorist groups," and Washington officials` hands are partly tied.

Washington had hoped European and Asian banks would free up the frozen funds and allow Rouhani`s government to show its people the benefits of international cooperation.

But European officials have told AFP their bankers fear they could face fines or even criminal cases against their US subsidiaries if they rush in.

The US has scrambled expert teams -- "akin to a roadshow," in spokesman Kirby`s phrase -- to reassure international bankers that they can do business.But the spectacle of American officials effectively working to promote foreign business engagement with the Islamic republic has enraged Obama`s Republican opponents.

Lawmakers have threatened to pass renewed bars on Iranian interaction with the US financial system, through which many dollar-denominated transactions pass.

But officials feel the credibility of the nuclear deal, which was implemented in January, depends on Iran`s moderates being able to point to economic progress.

In theory, the European Union lifted its nuclear-related sanctions against Tehran at the same time as Washington.

But Iran`s Revolutionary Guards, still under sanctions for their role in sponsoring attacks by Middle East militant groups, have extensive business interests.

And any private sector investment or financial services provided to Iran that was found to be linked to the group could expose European banks to US prosecution.