By Luc Cohen and Jasper Ward
NEW YORK, June 10 (Reuters) – The U.S. Department of Justice formally asked a federal judge on Wednesday to dismiss its criminal case against Halkbank, saying it has no intention of prosecuting the Turkish state-run lender.
A lawyer for Halkbank did not immediately respond to a request for comment.
Wednesday’s announcement came after Halkbank and the U.S. federal government agreed in March to end the long-running criminal case. That agreement promised to relieve a lingering irritant in relations between NATO allies Turkey and the U.S. The settlement sent Halkbank’s shares soaring on the Istanbul stock exchange.
Halkbank was charged during Trump’s first term in office with helping Iran evade American economic sanctions. Turkish President Recep Tayyip Erdogan once called the case unlawful and “ugly.” But the countries are now experiencing their warmest ties in decades since Trump’s return to the presidency last year.
The Justice Department has said dropping the prosecution would further the U.S. interest in curbing support for Iran. The agreement bars Halkbank from entering transactions that benefit Iran and requires a monitor to review Halkbank’s sanctions and anti-money-laundering compliance.
No money changes hands in the agreement and the bank did not admit criminal wrongdoing. Halkbank had pleaded not guilty in the case.
After the deal was announced, Manhattan-based U.S. District Judge Richard Berman paused the case for 90 days to allow Halkbank to demonstrate compliance with its terms. Halkbank hired Ernst & Young to review its compliance policies.
In a court filing on Wednesday after the end of that 90-day period, prosecutors with the Manhattan U.S. Attorney’s office said the review did not identify any areas of noncompliance by Halkbank and it asked Berman to sign off on their motion to dismiss the case.
The case has taken a circuitous path through the U.S. courts.
The U.S. Supreme Court in October let stand a lower court’s decision that allowed the prosecution to proceed. Halkbank had argued that as a Turkish state-owned entity, it should be immune from legal actions in foreign courts.
The settlement was announced after the U.S.-Israeli war on Iran began in February.
U.S. prosecutors had accused Halkbank of secretly transferring $20 billion of restricted funds, converting oil revenue into gold and cash to benefit Iranian interests and documenting fake food shipments to justify transfers of oil proceeds.
After Erdogan and Trump met last year, the Turkish president expressed hope for a resolution of the Halkbank matter. Erdogan said in October that Trump told him during a September meeting at the White House and in a subsequent phone call that “the Halkbank problem is finished for us.”
(Reporting by Luc Cohen and Jasper Ward in Washington; Editing by Thomas Derpinghaus)
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