Turkey's Halkbank Urges Dismissal of Iran Sanctions Criminal Case in US

Halkbank on Friday urged a judge to dismiss a US indictment accusing the state-owned Turkish lender of helping Iran evade American sanctions, even as it seeks the judge’s recusal for alleged bias. At a hearing in Manhattan federal court, a lawyer for Halkbank said its status as a Turkish “instrumentality” shielded it from prosecution because of sovereign immunity. The US Department of Justice charged Halkbank last October with using money servicers and front companies in Iran, Turkey and the United Arab Emirates to evade sanctions, enable revenue from oil and gas sales to be spent on gold, and facilitate sham food and medicine purchases.

Halkbank has pleaded not guilty to bank fraud, money laundering and conspiracy charges, including over its alleged transfer of US$20 billion of otherwise restricted Iranian funds. Simon Latcovich, a lawyer for Halkbank, told US District Judge Richard Berman its alleged conduct had only “incidental” US ties, and did not qualify for an exception to sovereign immunity governing commercial activity.

“We’re talking about processing Iranian oil and natural gas transactions,” Latcovich said. “By definition, this is the type of activity that cannot be exercised by private citizens, making it sovereign, and not commercial.” Prosecutor Sidhardha Kamaraju said it was enough that some restricted funds moved through US banks for Halkbank to face criminal liability. “It is the routing of US$1 billion of Iranian oil proceeds, through the US financial system, that violates US sanctions laws,” Kamaraju said.

The hearing followed a Thursday evening refusal by the federal appeals court in Manhattan to let Halkbank delay the case while it appeals Berman’s refusal to recuse himself. Berman has rejected bias claims, writing last week that Halkbank had “astonishingly and falsely” claimed he supported an alleged terrorist group bent on gaining control of Turkey’s government. The judge did not rule on Halkbank’s dismissal request. A trial remains scheduled for March 1, 2021. The case is US v Halkbank, US District Court, Southern District of New York, No. 15-cr-00867. - Reuters