A court conference is scheduled for Tuesday in the long-running U.S. criminal prosecution against Halkbank, the Turkish state-owned lender accused of participating in a scheme to help Iran dodge American economic sanctions.
Attorneys for the U.S. government and for Halkbank are expected to appear before U.S. District Judge Richard Berman in Manhattan federal court. The session is a status conference that could provide more detail on the procedural timetable and the next legal steps in the case.
The hearing arrives roughly five months after the U.S. Supreme Court declined to take up an appeal of a federal appeals court ruling that allowed prosecutors to continue with the case. That appellate decision followed a period in which the Supreme Court in 2023 temporarily voided the prosecution and asked the 2nd U.S. Circuit Court of Appeals to evaluate whether long-established common law immunity might protect a foreign state-owned entity from criminal liability.
In October 2024 the appeals court concluded that such common law immunity did not shield Halkbank, a finding that led to a renewed Supreme Court appeal by the bank. The Trump administration has argued in the litigation that common law protections do not extend to foreign state-owned companies in criminal prosecutions.
The government originally charged Halkbank in 2019, during President Donald Trump’s first term. Prosecutors allege the bank used money servicers and front companies located in Iran, Turkey and the United Arab Emirates as part of a sanctions-evasion operation. According to the indictment, Halkbank secretly transferred some $20 billion of restricted funds, converted oil revenue into gold and cash to benefit Iranian interests, and recorded fictitious food shipments to justify transfers of oil proceeds.
Halkbank has pleaded not guilty to counts of bank fraud, money laundering and conspiracy. The case has been a recurring irritant in U.S.-Turkey relations, and Turkish President Tayyip Erdogan has publicly described the prosecution as an "unlawful, ugly" action. Court filings note the matter is unrelated to current tensions in the Middle East.
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Summary
- A status conference on Tuesday will bring government and Halkbank lawyers before Judge Richard Berman in Manhattan.
- The hearing follows appellate and Supreme Court proceedings that allowed the prosecution to proceed after questions about common law immunity.
- Halkbank faces charges it aided Iran in evading U.S. sanctions through transfers, conversions and false documentation; the bank has pleaded not guilty.
Key points
- Legal - The case hinges on whether long-standing common law principles protect foreign state-owned entities from criminal prosecution, a question that has already drawn appellate and Supreme Court attention.
- Financial sector - The charges center on alleged misuse of banking channels and front companies to move restricted funds and convert oil revenue, implicating cross-border banking compliance and sanctions risk.
- Geopolitical relations - The prosecution has been a source of bilateral tension between the United States and Turkey, as reflected in statements from Turkish leadership.
Risks and uncertainties
- Legal unpredictability - Ongoing appeals and the potential for further Supreme Court review leave the ultimate course and timing of the case unclear, affecting parties involved in the litigation.
- Reputational and regulatory impact - Continued prosecution could sustain regulatory scrutiny and reputational risk for institutions associated with the allegations, particularly in banking and international finance sectors.
- Diplomatic sensitivity - The case has strained relations between the U.S. and Turkey, introducing a diplomatic variable that could complicate resolution or settlement dynamics.