Appeals court: US can prosecute Turkey’s Halkbank in Iran sanctions case
A US federal appeals court has ruled that Turkish state-owned Halkbank can be prosecuted for allegedly evading US sanctions against Iran, rejecting the bank’s argument that it was protected by sovereign immunity.
The US Court of Appeals for the Second Circuit found that Turkiye Halk Bankasi A.S. (‘Halkbank’) is not immune from prosecution for its ‘commercial activity,’ which the court said included allegedly participating in ‘money laundering and other fraudulent schemes designed to evade U.S. sanctions.’
‘Under the common law, foreign state-owned corporations are not entitled to absolute immunity in all criminal cases,’ the court wrote in its opinion, decided 22 October.
While immunity might protect foreign governments and their agencies when performing governmental functions, the court found ‘no basis in the common law to conclude that a foreign state-owned corporation is absolutely immune from prosecution…for alleged criminal conduct related to its commercial activities.’
The case centres on what prosecutors described as a ‘multi-year scheme to evade and violate’ US sanctions. According to the court, the indictment alleges Halkbank ‘used money service businesses and front companies’ and ‘participated in several types of illicit transactions for the benefit of Iran.’
The decision follows a partial remand from the US Supreme Court, which had previously ruled that the Foreign Sovereign Immunities Act does not provide immunity in criminal cases but asked the lower court to consider common law immunity arguments.
‘Because Halkbank is being prosecuted in the United States for its alleged criminal activity related to its commercial activities as charged in the indictment, we defer to the Executive Branch’s determination, through the U.S. Department of Justice, that Halkbank should not be afforded immunity in this case,’ the appeals court wrote.
It rejected Halkbank’s argument that its actions were governmental rather than commercial, noting that the transactions were ‘conducted via private, commercial banking channels and thus are “far more of the character of a private commercial act than a public or political act.”’
The ruling sends the case back to the district court for further proceedings. Halkbank faces charges including bank fraud, money laundering, and conspiracy to violate US sanctions against Iran. The bank was first indicted in 2019.
