Federal prosecutors on Wednesday officially requested a judge dismiss criminal charges against Halkbank, stating the government no longer intends to pursue the case against the Turkish state-owned financial institution.
Legal representatives for Halkbank have not yet provided a response to requests for comment.
The formal request follows a settlement reached in March between Halkbank and federal authorities to conclude the extended criminal proceedings. The resolution was expected to eliminate a persistent source of tension between NATO partners Turkey and the United States. News of the settlement caused Halkbank stock prices to surge on Istanbul’s exchange.
The bank faced accusations during the previous administration of assisting Iran in circumventing U.S. economic sanctions. Turkish President Recep Tayyip Erdogan previously described the case as unlawful and “ugly.” However, diplomatic relations between the nations have reached their strongest point in years following recent political changes.
Justice Department officials stated that ending the prosecution would advance American objectives in reducing Iranian support. The settlement prohibits Halkbank from conducting transactions that aid Iran and mandates oversight to ensure the bank follows sanctions and anti-money-laundering regulations.
The agreement involves no financial payments and the bank has not acknowledged any criminal conduct. Halkbank had entered a not guilty plea to all charges.
Following the deal’s announcement, Manhattan-based U.S. District Judge Richard Berman suspended proceedings for 90 days to allow the bank to prove adherence to settlement conditions. Halkbank retained Ernst & Young to examine its compliance procedures.
In Wednesday’s court document filed after the 90-day review period concluded, Manhattan U.S. Attorney’s office prosecutors reported the examination found no compliance violations by Halkbank and requested Judge Berman approve their dismissal motion.
The legal proceedings have followed a complex route through federal courts.
In October, the U.S. Supreme Court upheld a lower court ruling permitting the prosecution to continue. Halkbank had contended that its status as a Turkish government-owned institution should provide immunity from foreign court proceedings.
The settlement announcement came after the U.S.-Israeli conflict with Iran commenced in February.
Federal prosecutors alleged Halkbank covertly moved $20 billion in restricted funds, transformed oil revenues into gold and cash for Iranian benefit, and created fraudulent food shipment records to justify oil proceeds transfers.
Following meetings between Erdogan and the former president last year, the Turkish leader expressed optimism for resolving the Halkbank situation. Erdogan stated in October that he was told during a September White House meeting and subsequent phone conversation that “the Halkbank problem is finished for us.”
