us-sanctions 13 August 2020

Halkbank argues it cannot be tried in US because it is a state-owned entity

After refusing to appear in a US courtroom for months to defend charges of laundering billions of dollars for Iran in violation of US sanctions, Turkey’s Halkbank has filed a motion claiming immunity from prosecution in the United State because it is a state-owned entity. It also insists that its business activity took place outside the United States.

In a filing in a Manhattan federal court on 10 August, Halbank’s lawyers argued that, because the bank is state-owned, it is an ‘instrumentality of a foreign state’ and therefore immune from prosecution in the United States. ‘The nexus to the United States is tenuous at best,’ the bank said in a memorandum filed in court.

It said its only connection inside the United States was its processing of transactions through domestic banks, but claimed these were ‘peripheral’ to the broader criminal case.

Halkbank was indicted in October 2019 for fraud, money laundering and other sanctions-related charges for its participation in a ‘multibillion-dollar scheme to evade U.S. sanctions on Iran’. It is accused of having used front companies in Turkey and the United Arab Emirates to conceal Iranian oil revenues, which were converted to gold for Iran. Prosecutors say the transactions totalled some $20 billion.

The bank pleaded not guilty to the charges in March. Unless the bank’s motion for dismissal is successful, the trial is set to begin in March next year.

In July, an appeals court upheld the 2018 conviction of former Halkbank Deputy General Manager Mehmet Hakan Atilla, who was convicted for his alleged role in helping in the sanctions evasion scheme.

There has been renewed interest in the Halkbank case after it was mentioned in the recently published memoir of former US national security advisor, John Bolton. He wrote that Turkish President Recep Tayyip Erdogan had asked Donald Trump to intervene in the case and was assured by the US president that he would ‘take care of things’.