Turkish Bank charged in Manhattan for participation in Iranian sanctions evasion
Topics: TURKISH BANK MANHATTAN IRAN
The case is assigned to United States District Judge Richard M. Berman.
From approximately 2012, up to and including approximately 2016, Türkiye Halk Bankasi A.S. (Halkbank) was a foreign financial institution organized under the laws of and headquartered in Turkey.
The majority of Halkbank’s shares are owned by the Government of Turkey.
Halkbank and its officers, agents, and co-conspirators directly and indirectly used money service businesses and front companies in Iran, Turkey, the United Arab Emirates, and elsewhere to violate and to evade and avoid prohibitions against Iran’s access to the U.S.
financial system, restrictions on the use of proceeds of Iranian oil and gas sales, and restrictions on the supply of gold to the Government of Iran and to Iranian entities and persons.
Halkbank knowingly facilitated the scheme, participated in the design of fraudulent transactions intended to deceive U.S. regulators and foreign banks, and lied to U.S. regulators about Halkbank’s involvement.
High-ranking government officials in Iran and Turkey participated in and protected this scheme.
Some officials received bribes worth tens of millions of dollars paid from the proceeds of the scheme so that they would promote the scheme, protect the participants, and help to shield the scheme from the scrutiny of U.S. regulators.
The proceeds of Iran’s sale of oil and gas to Turkey’s national oil company and gas company, among others, were deposited at Halkbank, in accounts in the names of the Central Bank of Iran, the National Iranian Oil Company (NIOC), and the National Iranian Gas Company.
During the relevant time period, Halkbank was the sole repository of proceeds from the sale of Iranian oil by NIOC to Turkey.
Because of U.S. sanctions against Iran and the anti-money laundering policies of U.S. banks, it was difficult for Iran to access these funds in order to transfer them back to Iran or to use them for international financial transfers for the benefit of Iranian government agencies and banks.
As of in or about 2012, billions of dollars’ worth of funds had accumulated in NIOC and the Central Bank of Iran’s accounts at Halkbank.
Halkbank participated in several types of illicit transactions for the benefit of Iran that, if discovered, would have exposed the bank to sanctions under U.S. law, including (i) allowing the proceeds of sales of Iranian oil and gas deposited at Halkbank to be used to buy gold for the benefit of the Government of Iran; (ii) allowing the proceeds of sales of Iranian oil and gas deposited at Halkbank to be used to buy gold that was not exported to Iran, in violation of the so-called “bilateral trade” rule; and (iii) facilitating transactions fraudulently designed to appear to be purchases of food and medicine by Iranian customers, in order to appear to fall within the so-called “humanitarian exception” to certain sanctions against the Government of Iran, when in fact no purchases of food or medicine actually occurred.
Through these methods, Halkbank illicitly transferred approximately $20 billion worth of otherwise restricted Iranian funds.
Senior Halkbank officers acting within the scope of their employment and for the benefit of Halkbank concealed the true nature of these transactions from officials with the U.S. Department of the Treasury so that Halkbank could supply billions of dollars’ worth of services to the Government of Iran without risking being sanctioned by the United States and losing its ability to hold correspondent accounts with U.S. financial institutions.
The purpose and effect of the scheme in which Halkbank participated was to create a pool of Iranian oil funds in Turkey and the United Arab Emirates held in the names of front companies, which concealed the funds’ Iranian nexus.
From there, the funds were used to make international payments on behalf of the Government of Iran and Iranian banks, including transfers in U.S. dollars that
assed through the U.S. financial system in violation of U.S. Halkbank is charged with (1) conspiracy to defraud the United States, (2) conspiracy to violate the International Emergency Economic Powers Act (IEEPA), (3) bank fraud, (4) conspiracy to commit bank fraud, (5) money laundering, and (6) conspiracy to commit money laundering.
The Department of Justice has previously charged nine individual defendants, including bank employees, the former Turkish Minister of the Economy, and other participants in the scheme.
On Oct. 26, 2017, Reza Zarrab pled guilty to the seven counts with which he was charged.
On Jan. 3, 2018, a jury convicted former Halkbank deputy general manager Memet Hakkan Atilla of five of the six counts with which he was charged, following a five-week jury trial.
The remaining individual defendants are fugitives. ■