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The United States Department of Justice and Türkiye's state-owned Halkbank have agreed to a deferred prosecution deal that would resolve a criminal case dating back to 2019, when federal prosecutors accused the lender of helping Iran circumvent American economic sanctions through a scheme allegedly involving $20 billion in restricted fund transfers.
Manhattan-based U.S. District Judge Richard Berman disclosed the agreement in a court filing on Monday, though he did not release its terms. Berman said he would question lawyers from both sides about the arrangement at a hearing scheduled for Wednesday.
The case, which charged Halkbank with fraud, money laundering and conspiracy, has been one of the most persistent irritants in the relationship between Washington and Ankara for the better part of a decade. Halkbank shares climbed more than 8% following the announcement.
The prosecution has carried heavy diplomatic weight almost from its inception. Turkish President Recep Tayyip Erdogan called the original 2019 decision to bring charges an "unlawful, ugly" step, and the case has shadowed bilateral relations ever since.
Erdogan met with Donald Trump in September and said afterward that he was hopeful the encounter would clear up several disputes between the two countries. The Turkish president said Trump had told him at the White House and in a later phone call that "the Halkbank problem is finished for us." Turkish officials had proposed settling the matter for roughly $100 million during that White House meeting, according to two sources.
Neither the Manhattan U.S. Attorney's office nor Halkbank's lawyers responded to requests for comment.
Federal prosecutors painted a picture of an elaborate, multi-country operation. According to the indictment, the bank secretly moved $20 billion in restricted funds, converted Iranian oil revenue into gold and cash, and fabricated records of food shipments to justify the transfer of oil proceeds. The scheme allegedly relied on money servicers and front companies spread across Iran, Türkiye and the United Arab Emirates.
Halkbank pleaded not guilty to all charges.
The case grew out of a cluster of related prosecutions. Turkish-Iranian gold trader Reza Zarrab pleaded guilty in 2017 to bank fraud, money laundering and conspiracy charges but has never been sentenced.
Zarrab became a cooperating witness and testified against former Halkbank executive Mehmet Hakan Atilla, who was convicted of bank fraud and conspiracy in 2018. Atilla served most of a 32-month prison sentence before returning to Türkiye in 2019. He has denied wrongdoing.
The legal battle tested novel questions about whether a foreign government-owned bank can claim immunity from criminal prosecution in the United States. Judge Berman ruled in 2020 that Halkbank did not qualify for immunity.
The 2nd U.S. Circuit Court of Appeals upheld that conclusion the following year on separate grounds, finding that the bank's alleged conduct constituted commercial activity not shielded by the Foreign Sovereign Immunities Act of 1976, the federal statute that governs when foreign states and their agencies can be sued in American courts.
The case reached the Supreme Court in 2023. The justices agreed that Congress' intent to protect foreign countries from civil liability did not extend to criminal cases, but nonetheless sent the matter back to the appeals court with instructions to examine more closely whether centuries-old common law principles might provide a separate basis for immunity.
The 2nd Circuit found no such protection in October 2024, and Halkbank appealed to the Supreme Court a second time. The high court declined to intervene in October 2025, and the Trump administration itself argued that common law does not shield state-owned enterprises from criminal prosecution.
Under a deferred prosecution agreement, a defendant avoids criminal conviction by meeting a set of conditions, which can include financial penalties, compliance reforms and cooperation with investigators, typically over a period of months or years.
If the defendant satisfies all terms, the government dismisses the charges. The mechanism has become a standard tool for resolving corporate criminal cases in the United States, having been used in high-profile matters involving major international banks.
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