US court rules Turkiye Halkbank can be prosecuted over Iran sanctions evasion, saying it has no legal immunity

An appeals court in the United States has ruled that the federal government is able to prosecute Turkiye’s state-owned Halkbank over charges of allegedly helping Iran evade sanctions, arguing that the bank does not deserve legal immunity.

According to Reuters news agency, the 2nd US Circuit Court of Appeals on Tuesday found no common law basis for foreign state-owned companies to be guaranteed complete immunity from prosecution in the US for crimes related to commercial and non-governmental activities, rather than to simply impose tariffs or to deny military aid to their state sponsors.

The decision comes five years after US prosecutors charged Halkbank over allegations of using money servicers and front companies in Iran, Turkiye and the United Arab Emirates (UAE) in order to evade Western and US sanctions. Halkbank was also accused of helping Iran secretly transfer $20 billion in restricted funds, converting oil revenue into gold and cash to benefit Tehran, and documenting fake food shipments to justify the transfers of oil proceeds.

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Halkbank has pleaded not guilty to charges including bank fraud, money laundering and conspiracy, but the case and the possibility of legal immunity surrounding it has been ongoing over the years, until now.

According to Circuit Judge, Joseph Bianco, the appeals court should defer to the executive branch’s prior determination – in a US Supreme Court decision back in April last year – that the Department of Justice can prosecute Halkbank.

“Although certain prior cases extended immunity to state-owned corporations based on their governmental conduct, the common law places no independent bar on the prosecution of such corporations for their commercial activity,” Bianco wrote. The decision to prosecute the Turkish bank “is not one for the judiciary to second guess”, he added.

Halkbank responded to this week’s court decision by saying in a statement to the Istanbul stock exchange that “Our Bank will use all its legal rights to appeal with regard to the October 22, 2024 decision of the Second Circuit, particularly with the US Supreme Court.”