DOJ seeks dismissal of Halkbank criminal case after deferred prosecution deal
In brief
- DOJ files motion to dismiss Halkbank indictment under deferred prosecution agreement reached March 2026
- Halkbank faces 90-day compliance review on Iran transactions; charges dropped if passed
- Supreme Court and Second Circuit rejected Halkbank's immunity claims before settlement
- Former executive Mehmet Hakan Atilla convicted 2018; gold trader Reza Zarrab testified against him
The original charges
The indictment, filed by the Southern District of New York on October 15, 2019, accused Halkbank of conspiracy to defraud the United States, violations of the International Emergency Economic Powers Act, bank fraud, and money laundering. The case alleged the bank helped launder roughly $20 billion for Iran through front companies, evading US sanctions by routing transactions through traditional banking rails, front companies, and gold trading networks.
Turkish President Recep Tayyip Erdoğan had previously called the charges unlawful, framing the prosecution as politically motivated. Halkbank's defense centered on a bold argument: as a state-owned bank, it claimed immunity from criminal prosecution under the Foreign Sovereign Immunities Act.
The legal turning point
That immunity shield crumbled. In April 2023, the Supreme Court ruled that the Foreign Sovereign Immunities Act does not shield foreign state-owned entities from criminal cases. The Second Circuit Court of Appeals rejected Halkbank's common-law immunity claim in October 2024, clearing the final major obstacle to trial.
With trial looming, the settlement emerged. The deferred prosecution agreement allows Halkbank to avoid conviction if it complies with a court-appointed monitor's review over 90 days. If the bank passes muster, particularly around Iran-related transactions, the DOJ plans to dismiss the indictment entirely.
Precedent from the executive level
The case had already drawn convictions at the individual level. Mehmet Hakan Atilla, a former Halkbank executive, was convicted in 2018 for his role in the sanctions evasion scheme. That trial featured testimony from Reza Zarrab, a gold trader turned cooperating witness.
The dismissal signals a pragmatic shift. Rather than pursue a protracted trial against a foreign state-owned bank, the DOJ has opted for monitored compliance. The outcome will shape how US regulators approach similar cases involving state entities accused of sanctions violations.
