U.S. Judge Dismisses Halkbank Iran Sanctions Case
By Bosphorus News Economy Desk
A U.S. federal judge has formally dismissed the criminal indictment against Türkiye's state-run Halkbank, ending a long-running Iran sanctions prosecution that had remained one of the most sensitive legal disputes between Ankara and Washington since 2019.
U.S. District Judge Richard Berman in Manhattan approved the U.S. Justice Department's request to drop the case after prosecutors said Halkbank had met the conditions of a deferred prosecution agreement reached in March. The agreement closed the criminal case without a financial penalty or admission of criminal wrongdoing by the bank.
Halkbank shares rose as much as 8.4 percent on Borsa Istanbul after the ruling.
Federal prosecutors had accused Halkbank of helping Iran evade U.S. economic sanctions through transactions involving Iranian oil and gas revenue. The indictment alleged that the bank helped move restricted funds, convert oil proceeds into gold and cash, and document food shipments used to justify transfers. Halkbank pleaded not guilty and denied wrongdoing throughout the case.
The bank also argued for years that, as a Turkish state-owned lender, it was immune from prosecution in U.S. courts. The U.S. Supreme Court rejected its Foreign Sovereign Immunities Act defense in 2023, and a federal appeals court later rejected a separate common-law immunity claim.
The March deferred prosecution agreement required Halkbank to avoid transactions benefiting Iran and to strengthen sanctions and anti-money-laundering compliance. Ernst & Young reviewed the bank's compliance framework during the monitoring period, and prosecutors told the court that the review found no instances of noncompliance.
Halkbank said earlier in June that it and the U.S. Attorney's Office for the Southern District of New York had submitted a joint petition asking the court to dismiss the criminal case after the bank delivered the required compliance report.
The diplomatic layer of the case was unusually direct. Federal prosecutor Michael Lockard told the court that the agreement grew out of multilateral diplomatic efforts linked to ending the Israel-Hamas conflict and said the Turkish government had played an "instrumental role" in that process.
Lockard's remarks tied the legal resolution to a diplomatic channel that included Gaza talks, Iran sanctions enforcement and a long-running Turkish demand for the case to be closed. The timing also matters for Ankara, which is preparing to host the NATO summit on July 7-8.
The case remains connected to the earlier prosecution of Reza Zarrab, the Turkish-Iranian gold trader who pleaded guilty in 2017 and became a cooperating witness. His testimony helped convict former Halkbank executive Mehmet Hakan Atilla, who was sentenced in 2018 and later returned to Türkiye. Bosphorus News previously examined the Zarrab-Atilla case and its place in the Halkbank sanctions file.
Zarrab has not yet been sentenced. His sentencing hearing is scheduled for July 14 in Manhattan federal court. The hearing keeps part of the wider sanctions case open even after Halkbank's corporate prosecution has been dismissed.
Sources: Reuters, Halkbank disclosure to Türkiye's Public Disclosure Platform, Bosphorus News review and reporting.