Judge asks US prosecutors to explain resolution to Halkbank criminal case (updated)

Turkiye Halk Bankasi

11/03/2026 13:35

Adds details from court hearing in paragraphs 8, 10-13; adds context in paragraph 9, 16-17

Judge pauses case for 90 days to review compliance

Case against Halkbank was irritant in US-Turkish ties

No financial penalty in Halkbank agreement

By Luc Cohen

NEW YORK, March 11 (Reuters) - A federal judge on Wednesday paused the U.S. criminal case against Halkbank HALKB.IS for 90 days to let the Turkish state-run lender demonstrate compliance with the terms of a deal with the U.S. government to end the prosecution, as the judge decides whether to sign off on the agreement.

U.S. Justice Department lawyer Michael Lockard told Manhattan-based U.S. District Judge Richard Berman during a hearing that the judge now has only a limited role to play.

"All the court needs to consider ... is whether the request is a bona fide request," Lockard told the judge, referring to the request by both sides to put the case on hold in the wake of the deferred prosecution agreement between Halkbank and President Donald Trump's administration.

The deal to resolve the case over allegations that the bank helped Iran evade American economic sanctions, announced on Monday, sent Halkbank's share price soaring. Shares fell as much as 8% on Wednesday, and the Istanbul stock exchange briefly suspended trading in the stock after the hearing.

If approved by Berman, the deal would relieve an irritant between the United States and Turkey, as the NATO allies experience their best ties in decades following Trump's return to the U.S. presidency last year.

The deal bars Halkbank from entering transactions that benefit Iran and would require the bank to hire a monitor to review its sanctions and anti-money-laundering compliance. Prosecutors have said they will ask Berman to dismiss the charges after the monitor submits its report.

Berman asked Lockard to explain the judge's role with respect to the monitor. Lockard responded by citing a previous court case finding that U.S. judges generally lack the discretion to evaluate the substance of deferred prosecution agreements.

Lockard said prosecutors hoped Halkbank would select the monitor within one month, but did not indicate when the monitor would submit a report.

No money is due to change hands under the deal. The bank, which had previously pleaded not guilty to the charges, did not admit any criminal wrongdoing.

At the end of the hearing, Berman referenced a letter he received from a group called American Victims of State-sponsored Terrorism United urging him to press for an explanation as to why there was no financial penalty included in the Halkbank deal.

The group said it consists of stakeholders in a fund established by the U.S. Congress to compensate victims of state-sponsored terrorism abroad.

"We've seen the letter," Lockard said.

Berman did not inquire further about the lack of a financial penalty.

Jay Clayton, the top federal prosecutor in Manhattan, said in a letter to Berman that the agreement would serve U.S. interests by combating financial support for Iran's government.

The State Department previously told the Manhattan U.S. Attorney's office that resolving the Halkbank case was an important part of diplomatic negotiations over Turkey's assistance in securing the October 2025 ceasefire between Israel and Hamas, prosecutors said in court papers.

The U.S. Supreme Court in October let stand a federal appeals court decision that had allowed the prosecution to proceed.

Halkbank's agreement was disclosed during the ongoing U.S.-Israeli war with Iran.

Turkey's Halkbank settles US criminal case over Iran sanctions violations ID:nL6N3ZX136

(Reporting by Luc Cohen in New York;
Editing by Noeleen Walder, Alistair Bell, Will Dunham and Chizu Nomiyama)

((luc.cohen@thomsonreuters.com; +1 646 540 2347))