Justice Department seeks to drop Halkbank sanctions case against Turkey lender

The Justice Department moved to shut down one of the most politically charged sanctions cases in years, asking a federal judge in Manhattan to dismiss its criminal case against Turkiye Halk Bankasi A.S. and saying it had no intention of prosecuting the lender. The filing marked a sharp reversal in a dispute that began as an enforcement action over Iran sanctions and grew into a test of U.S. resolve, Turkish diplomacy and the treatment of a state-owned bank accused of helping move restricted money.

Federal prosecutors charged Halkbank in a six-count indictment on October 15, 2019, accusing it of fraud, money laundering and sanctions offenses tied to a scheme that allegedly funneled roughly $20 billion in restricted Iranian funds between about 2012 and 2017. The case was assigned to U.S. District Judge Richard M. Berman in Manhattan federal court and built on earlier proceedings involving Reza Zarrab, who pleaded guilty in 2017, and Mehmet Hakan Atilla, the former Halkbank deputy general manager, who was convicted by a jury in January 2018.

Halkbank pushed immunity arguments all the way to the U.S. Supreme Court, but in April 2023 the justices said the Foreign Sovereign Immunities Act did not automatically bar criminal prosecution of the bank in U.S. court. That ruling kept the case alive and preserved the possibility of a major sanctions trial, underscoring how seriously Washington had treated allegations that a lender linked to the Turkish state had helped Iran evade American restrictions.

The endgame came in March 2026, when Halkbank and the U.S. government reached a deferred prosecution agreement to resolve the case. The deal reportedly included a compliance monitor to review sanctions and anti-money-laundering controls and barred transactions benefiting Iran. It also left Halkbank without an admission of wrongdoing and without a monetary penalty, an unusual outcome in a case of this scale. Halkbank shares rose after the settlement news, reflecting investor relief that a long legal overhang might finally be lifted.

For Washington, the retreat signals that the calculus around Turkey and sanctions enforcement has shifted from punishment to managed closure, at least for now. For Ankara, it removes a symbolically loaded source of friction with a NATO ally. And for other institutions accused of sanctions evasion, the case sends a mixed message: U.S. enforcement can reach deeply into state-linked finance, but geopolitical priorities can still shape how, and whether, those cases end.