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By: Danielle Hatch

The Department of Justice announced that TÜRKİYE HALK BANKASI A.S. (“Halkbank”), a Turkish state-owned bank, was charged on October 15, 2019 in a six count indictment with fraud, money laundering, and sanctions offenses related to the bank’s participation in a scheme to evade US sanctions on Iran.

This indictment is just the latest development in a case that started in 2016 with the arrest of Reza Zarrab, a Turkish-Iranian gold trader who played a central role in the scheme. Last year Halkbank’s former executive, Mehmet Hakan Atilla, was arrested in New York and found guilty of charges related to the same crimes as in this month’s indictment. Atilla was sentenced to 32 months in prison following his conviction and returned to Turkey earlier this year.

The indictment alleges that Halkbank, whose major shareholder is the government of Turkey, worked with Iran and Turkish government officials to create a complex web of shell companies and fake transactions of gold, food and medicine to get around US sanctions on Iran. The scheme began around 2012 and continued to 2016 as high-ranking government officials in Iran and Turkey who participated in, and concealed the scheme were given bribes worth tens of millions of dollars from the proceeds of the scheme. These officials were paid in order to continue to sponsor the scheme, protect the participants, and continue to hide it from US regulators.

Halkbank is charged with:

  1. Conspiracy to defraud the United States,
  2. Conspiracy to violate the International Emergency Economic Powers Act (IEEPA),
  3. Bank fraud,
  4. Conspiracy to commit bank fraud,
  5. Money laundering, and
  6. Conspiracy to commit money laundering.

What makes this case more interesting is the current politics surrounding it, with the US and Turkey at odds over Turkey’s military offensive into northeastern Syria and the recent sanctions (and removal of sanctions) on Ankara this indictment is certainly not going to help matters between the US and Turkey. “This indictment constitutes an additional step that does not contribute positively to the current situation of U.S.- Turkey relations,” an official at the Turkish embassy in Washington told Reuters.

Justice Department Notice: https://www.justice.gov/opa/pr/turkish-bank-charged-manhattan-federal-court-its-participation-multibillion-dollar-iranian