- United Arab Emirates
The Department of Justice announced that TÜRKİYE HALK BANKASI A.S., aka “Halkbank,” was charged today in a six-count indictment with fraud, money laundering, and sanctions offenses related to the bank’s participation in a multibillion-dollar scheme to evade U.S. sanctions on Iran. The case is assigned to United States District Judge Richard M. Berman.
“Halkbank, a Turkish state-owned bank, allegedly conspired to undermine the United States Iran sanctions regime by illegally giving Iran access to billions of dollars’ worth of funds, all while deceiving U.S. regulators about the scheme,” said Assistant Attorney General for National Security John C. Demers. “This is one of the most serious Iran sanctions violations we have seen, and no business should profit from evading our laws or risking our national security.”
“The facts that emerged at the full, fair, and public trial of Halkbank’s deputy general manager, which culminated in a jury’s January 2018 guilty verdict against him, illustrated senior Halkbank management’s participation in this brazen scheme to circumvent our nation’s Iran sanctions regime," said U.S. Attorney Geoffrey S. Berman. "As alleged in today’s indictment, Halkbank’s systemic participation in the illicit movement of billions of dollars’ worth of Iranian oil revenue was designed and executed by senior bank officials. The bank’s audacious conduct was supported and protected by high-ranking Turkish government officials, some of whom received millions of dollars in bribes to promote and protect the scheme. Halkbank will now have to answer for its conduct in an American court.”
“As we allege today, Halkbank, a Turkish financial institution whose majority shareholder is the government of Turkey, willfully engaged in deceptive activities designed to evade U.S. sanctions against Iran," said FBI Assistant Director-in-Charge William F. Sweeney Jr. "Halkbank illegally facilitated the illicit transfer of billions of dollars to benefit Iran, and for far too long the bank and its leaders willfully deceived the United States to shield their actions from scrutiny. That deception ends today. The FBI will aggressively pursue those who intentionally violate U.S. sanctions laws and attempt to undercut our national security.”
According to the allegations in the indictment, returned today in Manhattan federal court:
From approximately 2012, up to and including approximately 2016, TÜRKİYE 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 passed through the U.S. financial system in violation of U.S. sanctions laws.
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. See S4 15 Cr. 867 (RMB). 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.
Assistant Attorney General Demers and U.S. Attorney Berman praised the outstanding investigative work of the FBI and its New York Field Office, Counterintelligence Division, and the Department of Justice, National Security Division, Counterintelligence and Export Control Section.
This case is being handled by the Office’s Terrorism and International Narcotics Unit and Money Laundering and Transnational Criminal Enterprises Unit. Assistant United States Attorneys Michael D. Lockard, Sidhardha Kamaraju, David W. Denton Jr., Jonathan Rebold, and Kiersten Fletcher are in charge of the prosecution.
The charges contained in the indictment are merely accusations, and the defendant is presumed innocent unless and until proven guilty.