A Manhattan federal judge on Wednesday took a first step that could lead to the dropping of criminal charges against a Turkish bank that has been accused of laundering billions of dollars of Iranian oil and natural gas proceeds.
The judge, Richard M. Berman, granted a request for a 90-day pause in the pending criminal case against the state-run bank, Halkbank. Now, the bank must pass an independent review that proves it is no longer evading sanctions and anti-money-laundering laws. It must also demonstrate that it has internal controls in place to prevent future violations.
The request was made jointly by the U.S. government and the bank.
According to the tentative deal, known as a deferred prosecution agreement, once the independent review has been completed, the government will ask the judge to dismiss the indictment against Halkbank, which was filed in 2019.
The government, which revealed the agreement with the bank in court papers made public on Monday, said Turkey deserved leniency because of the critical help it had provided in negotiating the release of hostages from the Hamas-led attack against Israel in 2023 and in bringing about a cease-fire in the war that followed.
The deal would end a yearslong legal dispute over the Justice Department’s investigation into Halkbank, which led to strained relations between the United States and Turkey and prompted concerns about political interference during President Trump’s first term.
The U.S. attorney’s office in Manhattan said in a letter to Judge Berman that the agreement with the bank furthered America’s “compelling interests in combating terrorist financing and financial support for the government of Iran.”
While the U.S. government cited Turkey’s help with the cease-fire and in negotiating the release of the hostages, there was no mention in the court papers of the current war in Iran, started two weeks ago by Israel and the United States.
Iran has since attacked U.S. allies across the Middle East, and Turkey recently intercepted two missiles that it said had been launched from Iran. Recep Tayyip Erdogan, Turkey’s president, has long criticized the United States for bringing the Halkbank case.
In court on Wednesday, Judge Berman asked a prosecutor about the court’s role in such a deal.
“This geopolitical atmosphere which is reflected in the agreement,” the judge said. “How does that fit into the court case that we have?”
Michael D. Lockard, an assistant U.S. attorney, said that he did not believe “the court needs to assess or weigh in on the national security interests.”
Those were matters that were “vested in the discretion of the executive,” Mr. Lockard said.
At the heart of the indictment against Halkbank was the accusation that it had helped Iran gain access to some $20 billion in oil and gas revenue while evading U.S. sanctions — part of an alleged multiyear scheme that included tens of millions of dollars in bribes paid to high-ranking government officials in Iran and Turkey and collaboration with a flamboyant gold trader, Reza Zarrab.
In the court filings made public on Monday, prosecutors said that “various considerations contributed to the resolution of the charges.”
They cited “unique and extraordinary national security and foreign policy considerations,” particularly “high-level diplomatic discussions” between the United States and Turkey to address the Hamas terrorist attacks and obtain the release of the hostages.
The Turkish government’s assistance “was instrumental in the cease-fire agreement and Hamas’s commitment to release all remaining hostages,” the prosecutors said.
In court, Mr. Lockard told the judge that the independent review would look at Halkbank’s past conduct, but that it was not the focus.
“The purpose is to assess how Halkbank is doing now,” Mr. Lockard said.
Judge Berman noted that he had received a letter from an organization of victims of terrorism expressing concern that the government did not seek a financial penalty against the bank. That issue was not discussed at the hearing.
The judge also explained his decision on Monday to unseal the papers detailing the tentative agreement.
“The point here is that everything is out for the public to see,” he said.
Benjamin Weiser is a Times reporter covering the federal courts and U.S. attorney’s office in Manhattan, and the justice system more broadly.
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