By Luc Cohen and Jonathan Stempel
NEW YORK, March 9 (Reuters) – The U.S. Justice Department has agreed to resolve its long-running criminal prosecution of Turkish state-run lender Halkbank for allegedly helping Iran evade American economic sanctions, the department said in a court filing on Monday.
The deferred prosecution agreement calls for Halkbank to hire an anti-money laundering and compliance expert and forbids it from conducting any transactions to benefit Iran, the U.S. government said in its court filing.
Ending the long-running case, which Turkish President Tayyip Erdogan once called unlawful and “ugly,” relieves one of the main irritants between the U.S. and Turkey, as the NATO allies enjoy their best ties in decades following Donald Trump’s return to the White House.
In 2019, during Trump’s first term, prosecutors charged Halkbank with fraud, money laundering and conspiracy for allegedly helping Iran evade American economic sanctions by using money servicers and front companies in Iran, Turkey and the United Arab Emirates. Halkbank pleaded not guilty.
Halkbank’s Istanbul-traded shares closed up 10%, that exchange’s maximum permitted daily increase. The case has nothing to do with the current U.S.-Israeli strikes on Iran.
Prosecutors said the bank secretly transferred $20 billion of restricted funds, converted oil revenue into gold and cash to benefit Iranian interests and documented fake food shipments to justify transfers of oil proceeds.
Deferred prosecution agreements let defendants avoid criminal charges if they meet various conditions, typically over several months or a few years. The government dismisses cases after the defendants comply.
Unlike plea agreements, deferred prosecution agreements do not require defendants to plead guilty, and judges generally lack discretion to review them.
“Courts cannot substantively review and reject deferred prosecution agreements,” said Kaleb Byars, a professor at Mercer University School of Law. “The court really has no discretion but to accept it unless it does something that is not supported by precedent.”
U.S. District Judge Richard Berman said in a written order that he will ask lawyers representing both sides about their deferred prosecution agreement at a previously scheduled hearing on Wednesday.
Halkbank declined to comment.
SEVERAL RELATED CRIMINAL CASES
The deferred prosecution agreement was announced after the U.S. Supreme Court in October 2025 let stand a federal appeals court decision that let the prosecution proceed.
After meeting with Trump in September, Erdogan expressed hope that the meeting would resolve various issues between the countries.
The Turkish president said Trump told him at the White House and in a subsequent phone call that “the Halkbank problem is finished for us.”
Turkish officials had proposed resolving the case for some $100 million during the meeting between the two leaders at the White House, two sources told Reuters in October.
Halkbank’s case was an outgrowth of several related criminal cases, including those against Turkish-Iranian gold trader Reza Zarrab and former Halkbank executive Mehmet Hakan Atilla.
Zarrab pleaded guilty to bank fraud, money laundering and conspiracy charges in 2017, but has not been sentenced.
He testified against Atilla, who was convicted in 2018 of bank fraud and conspiracy charges. Atilla returned to Turkey in 2019 after serving most of a 32-month prison term. He has denied wrongdoing.
Halkbank’s case has taken a circuitous path through the U.S. courts.
Berman originally ruled in 2020 that Halkbank did not deserve immunity from prosecution.
The following year, the 2nd U.S. Circuit Court of Appeals in Manhattan upheld that ruling but on different grounds. It said Halkbank could be prosecuted under the federal Foreign Sovereign Immunities Act of 1976, because its alleged misconduct involved commercial activity not covered by that law.
In 2023, the U.S. Supreme Court temporarily voided the prosecution, despite agreeing that Congress’ desire to shield foreign countries and their instrumentalities from civil liability did not cover criminal cases. Instead, it ordered the 2nd Circuit to more thoroughly review whether immunity under centuries-old common law shielded Halkbank.
The appeals court found no such shield in October 2024, prompting Halkbank’s second Supreme Court appeal. The Trump administration argued that the common law does not shield foreign state-owned companies from criminal prosecution.
(Reporting by Jonathan Stempel and Luc Cohen in New York; Additional reporting by Ebru Tuncay in Istanbul; Editing by Chizu Nomiyama and David Gaffen)
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