Turkey's Halkbank Seeks Immunity from U.S. Legal Action in Iran Sanctions Evasion Case

As Halkbank of Turkey attempts to avoid U.S. legal penalties related to the bank's assistance to the Islamic Republic of Iran in evading U.S. sanctions, it is likely that the appeals court will reject this state-owned Turkish bank's request for appeal. One of Halkbank's lawyers in the Second Circuit Court of Appeals in Manhattan, New York, stated that the bank is entitled to immunity based on common law principles that date back over two centuries, which guarantees the dismissal of the U.S. indictment. However, a Justice Department lawyer told a panel of three judges that the White House can decide when a charge aligns with U.S. foreign policy. Joseph Bianco, the court judge, told John Williams, Halkbank's lawyer, that courts typically defer decisions on foreign relations matters to the executive branch. Bianco stated, "How shameful it is that when such a clear issue affects the United States and harms our national security, courts step in and tell law enforcement that they cannot act on this matter." U.S. prosecutors indicted Halkbank in 2019 for using financial services and shell companies in Iran, Turkey, and the United Arab Emirates to evade sanctions. According to them, Halkbank helped the Islamic Republic of Iran secretly transfer $20 billion of restricted funds, convert its oil revenues into gold and then cash, and in the process, register fake documents of food shipment exports to justify the transfer of its oil revenues. Halkbank has pleaded not guilty to the charges of bank fraud, money laundering, and conspiracy. This case has also complicated U.S.-Turkey relations, with Turkish President Recep Tayyip Erdoğan calling the U.S. allegations "illegal and ugly." The Second Circuit Court of Appeals stated in 2021 that Halkbank could be prosecuted under the federal law of "foreign sovereign immunity" since its charges involve commercial activities not covered by this law enacted in 1976. The U.S. Supreme Court also announced in April that protection for foreign countries against civil liabilities does not include criminal actions. However, the judges stated that the appeals court must fully examine whether common law immunity can separately protect Halkbank. Michael Lockard, a Justice Department lawyer, stated that Halkbank's involvement in a "comprehensive and integrated scheme" to evade sanctions should not be justified. He noted that it is unprecedented for a foreign bank owned by the Turkish government to launder billions and billions of dollars for the benefit of the Islamic Republic of Iran and lie to U.S. Treasury officials. The appeals court has not yet indicated when it will rule.