Turkish bank resolves $20 billion dispute over sanctions, denies wrongdoing

The resolution of the high-stakes geopolitical dispute requires the Turkish state-owned lender to submit to an independent compliance review, while it avoids admitting wrongdoing and paying penalties.

The U.S. Justice Department and the Turkish state-owned lender Halkbank have settled charges over the evasion of Iranian sanctions, resolving a long-standing dispute that has strained relations between Washington and Ankara for years.

Under the terms of the settlement, which was disclosed on Turkey’s Public Disclosure Platform (KAP), Halkbank will not admit to any criminal wrongdoing and will not be required to pay judicial or administrative fines. However, the bank must hire an independent expert firm to review its anti-money laundering and sanctions compliance measures, and submit a comprehensive report to the Justice Department.

Federal prosecutors in New York alleged that the bank was instrumental in moving approximately $20 billion through a shadowy network spearheaded by Reza Zarrab, a Turkish-Iranian gold trader. Zarrab was accused of laundering vast sums on behalf of the Iranian government using front companies and falsified trade documents.

The Halkbank case also cast a spotlight on the broader vulnerabilities of the global financial system. A 2021 investigation by the Organized Crime and Corruption Reporting Project (OCCRP) revealed that several other global financial institutions, operating as so-called “victim banks,” processed billions of dollars in transactions for companies linked to Zarrab between 2007 and 2015. The investigation found that these institutions either failed to intervene despite knowing the entities involved, or routinely ignored glaringly suspicious activity.