Halkbank Case Dropped, Ties Between Turkey and the U. S. Warm Up

The U.S. Justice Department has formally requested that a federal judge dismiss the criminal case against Halkbank, the state‑run Turkish lender. The action follows a March agreement between the bank and U.S. authorities aimed at removing a longstanding legal obstacle in U.S.–Turkey relations.

Background

• Allegations: During President Trump’s first term, Halkbank was accused of helping Iran bypass U.S. sanctions.
• Political Response: Turkish President Recep Tayyip Erdoğan criticized the case as “unlawful” and “ugly.”
• Settlement Context: The dispute was resolved before Trump’s 2021 return could deepen U.S.–Turkey cooperation.

Settlement Details

• No Payment: The agreement involves no financial compensation.
• Bank’s Position: Halkbank did not admit wrongdoing; it had pleaded not guilty throughout.
• Compliance Requirements:
• Avoid transactions that benefit Iran.
• Allow a monitor to oversee adherence to sanctions and anti‑money‑laundering rules.

Recent Developments

• 90‑Day Pause: Judge Richard Berman granted a pause during which Halkbank hired Ernst & Young to audit its compliance programs.
• Audit Outcome: No violations were found, leading prosecutors to seek dismissal of the case.
• Supreme Court Context: The Supreme Court had allowed the prosecution to proceed despite Halkbank’s claim of immunity as a state‑owned entity.

Broader Implications

• Tension Relief: The settlement comes amid heightened tensions after U.S. and Israel launched military actions against Iran in February.
• Past Accusations: Earlier claims alleged Halkbank moved $20 billion of restricted funds, converted oil revenue into gold and cash for Iran, and falsified food shipments to conceal transfers.
• Erdogan’s Outlook: He expressed hope the issue is resolved, noting Trump had told him in October that the problem was finished.

With the case dismissed, Turkey and the U.S. can now focus on broader cooperation while maintaining a stricter stance against Iran.