On October 22, 2021, the Second Circuit of the US Court of Appeals ruled on an appeal that was filed by Turkiye Halk Bankasi AS (Halkbank), Turkey’s government-owned lender, in an effort to stay the prosecution of a sanctions case brought in the US District Court for the Southern District of New York and render the bank immune from criminal prosecution under the Foreign Sovereign Immunities Act (FSIA). The Second Circuit’s three-judge panel agreed with Halkbank that its criminal indictment based on the FSIA was immediately appealable under the collateral order doctrine; however, the panel upheld the district court’s decision and order denying Halkbank’s motion to dismiss, finding that the bank was not shielded from criminal prosecution because its alleged conduct fell under the commercial activity exception to the FSIA.
On October 15, 2019, Halkbank was charged by federal prosecutors of fraud, money laundering and sanctions violations for knowingly facilitating a scheme between 2012 and 2016 that used money service businesses and front companies in Iran, Turkey, the United Arab Emirates and elsewhere to evade Iran-related US sanctions and provide Iran with access to $20 billion in restricted funds, at least $1 billion of which was allegedly laundered through the US financial system. Halkbank was accused of allowing the proceeds from the sale of Iranian oil and gas to be used to buy gold in violation of US sanctions and then fraudulently designing the transactions to appear as food and medicine purchases by Iranian customers in an attempt to meet an humanitarian exception to Iran-related sanctions.
Senior Halkbank officers and Turkish officials allegedly conspired with the bank and received bribe payments to conceal and perpetuate the scheme. As a result, nine individuals have been charged for their roles in the scheme, including the former Turkish Minister of Economy and the former deputy general manager of Halkbank Mehmet Hakan Atilla who was convicted in 2018 and whose conviction was affirmed by the Second Circuit in July of 2020. Several defendants remain at large.
Second Circuit Opinion | Department of Justice Press Release (2019) | Superseding Indictment