U.S. Supreme Court Clears Path for Halkbank Prosecution Over Iran Sanctions Scheme

Halkbank is accused of helping Iran evade US sanctions by secretly moving billions of dollars in oil revenue through the financial system, using front companies, falsified documents and gold transactions to conceal the flows, some of which passed through US banks, giving prosecutors jurisdiction to pursue the case.

The case is linked to earlier prosecutions, including the conviction of former Halkbank executive Mehmet Hakan Atilla by a US court. [notes below]

Key Points:

• Charges: U.S. prosecutors allege that Halkbank participated in a multibillion-dollar scheme to move $20 billion in restricted Iranian oil revenue through the global financial system. The scheme involved converting oil revenue into gold and cash, falsifying records of food shipments, and using front companies .
• Legal Argument: Halkbank claimed immunity under both the Foreign Sovereign Immunities Act (FSIA) and common law sovereign immunity, arguing that as a state-owned entity (91.49% owned by the Türkiye Wealth Fund), it should not be subject to prosecution in U.S. courts .
• Court Decisions:
• In 2023, the Supreme Court ruled that FSIA does not apply to criminal cases, remanding the case to the Second Circuit to consider common law immunity.
• In October 2024, the Second Circuit ruled that the common law does not shield Halkbank from prosecution, especially for commercial activities.
• The court emphasised that deference must be given to the executive branch’s determination on immunity.
• In October 2025, the Supreme Court declined to hear Halkbank’s latest appeal, effectively allowing the criminal case to proceed.
• Diplomatic Efforts:
• Turkey has reportedly proposed a $100 million settlement to resolve the case without Halkbank admitting guilt.
• This was discussed during a White House meeting between Presidents Erdoğan and Biden, reflecting Ankara’s desire to avoid a prolonged legal battle and repair U.S.–Turkey relations.

Other points

• The U.S. Supreme Court has rejected Halkbank’s appeal for sovereign immunity, clearing the way for the Turkish state-owned bank to face criminal prosecution in the United States over its alleged role in helping Iran evade sanctions.
• The US Supreme Court on Monday declined to review an appeal by Turkey’s state-owned Halkbank to dismiss charges that it helped Iran evade sanctions, clearing the way for the bank to stand trial after years of legal battles.
• US prosecutors first charged Halkbank in 2019 with fraud, money laundering and sanctions evasion, accusing the Turkish state lender of participating in a multibillion-dollar scheme to move Iranian oil revenue through the global financial system.
• The indictment alleges the bank secretly transferred $20 billion in restricted Iranian funds, converting oil revenue into gold and cash to benefit Iranian interests and falsifying records of food shipments.
• Halkbank denies any wrongdoing and claims immunity from prosecution as a state-owned entity.
• The Supreme Court’s decision not to review the case follows a lower appeals court ruling that state ownership does not shield Halkbank from criminal prosecution.
• Since its initial indictment in 2019, Halkbank has fought the charges through a series of appeals over sovereign immunity, culminating in today’s Supreme Court decision.
• Ahead of the ruling, Turkey froze assets of 20 Iranian individuals and 18 entities associated with Iran's nuclear activities, including organisations involved in uranium enrichment and nuclear fuel.
• The move followed the reinstatement of UN “snapback” sanctions last week after Iran reduced nuclear monitoring. While Turkey enforces UN Security Council sanctions, it does not adopt unilateral US sanctions on Iran.

Mehmet Hakan Atilla,

the Halkbank case is closely linked to the earlier prosecution of Mehmet Hakan Atilla, a former executive at the bank, who was convicted in 2018 by a U.S. federal court for his role in a scheme to help Iran evade U.S. sanctions.

Key Details on Atilla’s Case:

• Position: Atilla was the Deputy General Manager of Halkbank.
• Conviction: He was found guilty of:
• Conspiring to violate U.S. sanctions against Iran
• Bank fraud
• Defrauding U.S. financial institutions
• Sentence: He received 32 months in prison .
• Scheme Details:
• Atilla conspired with Reza Zarrab, a Turkish-Iranian gold trader, to move billions of dollars in Iranian oil revenue through deceptive transactions.
• These transactions were disguised as food and agricultural deals to bypass sanctions.
• Some of the funds passed through U.S. banks, giving U.S. authorities jurisdiction .
• Political Fallout:
• Zarrab testified that he paid over $50 million in bribes to Turkish officials, including the then-finance minister.
• He also claimed that President Erdoğan was aware of the scheme.
• The case strained U.S.–Turkey relations, with Erdoğan calling it a “judicial coup” and a “conspiracy” against Turkey .
• Aftermath:
• Atilla returned to Turkey after serving his sentence and was welcomed as a hero.
• He was later appointed to head Istanbul’s stock exchange .

This conviction laid the groundwork for the broader indictment of Halkbank itself in 2019, which is now moving forward following the U.S. Supreme Court’s refusal to hear the bank’s sovereign immunity appeal.

References

•  www.al-monitor.com https://www.al-monitor.com/originals/2025/10/supreme-court-clears-path-turkeys-halkbank-trial-over-iran-sanctions
•  www.usnews.com https://www.usnews.com/news/top-news/articles/2025-10-06/us-supreme-court-rejects-challenge-by-turkeys-halkbank-to-prosecution
•  www.turkiyetoday.com https://www.turkiyetoday.com/business/turkish-halkbank-appeals-us-court-to-dismiss-sanctions-case-citing-immunity-3201138
•  www.lawfaremedia.org https://www.lawfaremedia.org/article/the-second-circuit-s-halkbank-iii-decision
•  JDJournal https://www.jdjournal.com/2025/10/07/turkey-floats-100-million-halkbank-settlement-during-white-house-talks/

Mehmet Hakan Atilla, References

• www.justice.gov https://www.justice.gov/usao-sdny/pr/turkish-banker-mehmet-hakan-atilla-sentenced-32-months-conspiring-violate-us-sanctions
•  www.cbsnews.com https://www.cbsnews.com/news/turkish-banker-mehmet-hakan-atilla-convicted-iran-us-sanctions/
•  en.wikipedia.org https://en.wikipedia.org/wiki/United_States_v._Atilla
•  www.courthousenews.com https://www.courthousenews.com/bygone-us-sentence-of-turkish-banker-hakan-atilla-affirmed/