April 20, 2021 | Policy Brief

Halkbank’s Last-Minute Effort to Scuttle Iran Sanctions-Evasion Case

April 20, 2021 | Policy Brief

Halkbank’s Last-Minute Effort to Scuttle Iran Sanctions-Evasion Case

Halkbank, a public lender majority-owned by Turkey’s sovereign wealth fund, claimed on April 12 before a U.S. court that the bank is immune from charges U.S. prosecutors brought in October 2019, which accuse the lender of participating “in a multibillion-dollar scheme to evade U.S. sanctions on Iran.” This is the latest evasive action Halkbank has taken over the last 18 months to scuttle the case ahead of the jury trial, set to begin in May.

The attorneys for Halkbank, which pleaded not guilty to sanctions-evasion charges in May 2020, claimed before the 2nd U.S. Circuit Court of Appeals in Manhattan that the bank’s government-owned status makes it immune to criminal prosecution in the United States. U.S. prosecutors, who accuse the bank of helping Tehran transfer $20 billion worth of restricted funds, with at least $1 billion laundered through the U.S. financial system, warned that granting Halkbank immunity under the Foreign Sovereign Immunities Act would be an extension of sovereign immunity to criminal cases.

The U.S. prosecutors also said that when they filed sanctions-evasion charges against Halkbank’s deputy general manager, Mehmet Hakan Atilla, in 2017, neither Atilla nor the Turkish government asserted diplomatic immunity. In May 2018, a Manhattan federal court sentenced Atilla to 32 months in prison for “participation in a scheme to violate U.S. economic sanctions imposed on the Islamic Republic of Iran.” In so doing, the court exposed the Turkish lender’s role in Tehran’s sanctions-busting schemes.

In the run-up to and after the Atilla conviction, Turkish President Recep Tayyip Erdogan sought to interfere with U.S. judicial proceedings and used formal and informal channels to stall the U.S. prosecution of first the ringleader of Tehran’s sanctions-evasion network, Reza Zarrab, then Atilla, and finally Halkbank. Ankara’s interference in the Halkbank prosecution is now part of a probe launched by Senator Ron Wyden (D-OR).

The Turkish government’s hopes to enjoy impunity for Halkbank’s actions received a boost in February when a Manhattan federal court ruled that 876 victims of Iran-sponsored terrorism should pursue their case against Halkbank before a Turkish court. The plaintiffs, who are U.S. citizens or foreign U.S. government employees targeted during their service to the United States, claim that Halkbank helped Tehran avoid the financial consequences of its support for terrorist attacks that targeted them. They appealed the court’s dismissal on March 17.

Given the substantial evidence showing that the Erdogan government has been covering up both its and Halkbank’s complicity in Iran’s sanctions evasion, expecting American victims of terrorism to fight Erdogan in Turkish courts not only is unrealistic, but also would be a miscarriage of justice.

Holding Halkbank and the Turkish officials who facilitated the Islamic Republic’s sanctions-evasion schemes accountable would send an important signal about the U.S. commitment to denying impunity to Tehran’s accomplices. As global financial institutions watch closely what remains the highest-profile Iran sanctions-evasion case to date, granting Halkbank impunity would be akin to providing others a license to ignore U.S. laws and transact with the world’s leading state sponsor of terrorism.

Aykan Erdemir is a former member of the Turkish parliament and senior director of the Turkey Program at the Foundation for Defense of Democracies (FDD), where he also contributes to FDD’s Center on Economic and Financial Power (CEFP). For more analysis from Aykan, the Turkey Program, and CEFP, please subscribe HERE. Follow Aykan on Twitter @aykan_erdemir. Follow FDD on Twitter @FDD and @FDD_CEFP. FDD is a Washington, DC-based, nonpartisan research institute focusing on national security and foreign policy.


Iran Iran Sanctions Sanctions and Illicit Finance Turkey