Trump's DOJ Dropped a Turkish State Bank's Alleged $20 Billion Iran Sanctions Case Without a Fine

Six Charges Gone, No Fine

On June 17, 2026, Trump's Justice Department permanently dropped its criminal case against Halkbank, a bank owned by the Turkish state and accused of moving approximately $20 billion in restricted Iranian funds.¹² The bank paid no fine and admitted no wrongdoing.³⁴ Lawyers for 1,121 terrorism victims and surviving family members wrote to the judge that the Justice Department had negotiated the deal without notifying or consulting their clients.⁵ The bargain ended the criminal case without obtaining a bank payment for terrorism victims.³⁵

The charge is that a criminal prosecution became an item in the President's diplomacy, and a foreign leader's state bank got permanent relief.¹³ Reuters reported that Turkish President Recep Tayyip Erdogan said Trump told him, at a September 2025 White House meeting and in a later call, that "the Halkbank problem is finished for us."⁴

The prosecutor put the reason in writing: Michael Lockard's filed declaration says the deal "arose from significant diplomatic and national security considerations."¹ Trump and Secretary of State Marco Rubio were working to arrange an Israel-Hamas ceasefire, the declaration says, and the State Department considered a U.S. commitment to resolve the Halkbank case on mutually agreeable terms an important component of the related talks with Turkey.¹

What Prosecutors Said the Bank Had Done

The indictment alleged that the bank used Iranian oil and gas proceeds to buy gold and disguised other transfers as food and medicine purchases that never happened.² It alleged that front companies hid the money's Iranian origin, that at least approximately $1 billion was laundered through unwitting U.S. financial institutions, and that senior bank officers misled Treasury officials.² Prosecutors also alleged that senior Iranian and Turkish officials protected the scheme and some received tens of millions of dollars in bribes; foreign-official bribery was a basis for the money-laundering charges.²

The charges date to Trump's own first term: Halkbank was indicted on October 15, 2019.¹⁴ The six charges, sanctions-evasion conspiracy, bank fraud, money laundering and related conspiracies, covered conduct from approximately 2012 through 2016.¹⁴

A jury convicted former Halkbank deputy general manager Mehmet Hakan Atilla, and co-conspirator Reza Zarrab pleaded guilty.⁶ Halkbank pleaded not guilty and never faced trial.⁴¹ It had lost its fight to stop one: in October 2024 a federal appeals court rejected the bank's claim to common-law sovereign immunity for commercial activity, and Reuters reported that the Supreme Court declined the bank's latest appeal in October 2025, leaving the prosecution free to proceed to a possible trial.⁶⁴⁷

The Deal Reached Beyond the Criminal Case

DOJ signed the deal, a deferred prosecution agreement, on March 6, 2026, promising to seek dismissal with prejudice after a compliance report.¹³ That meant a permanent end to these charges, rather than a pause with a trial still ahead.³¹ DOJ had asked for the same permanent ending in Steve Bannon's case on February 9, 2026, a request covered in [Justice for Connections](../justice/justice_casefile_strong.md).⁸

Reuters reported, citing two people familiar with the talks, that Turkish officials floated a roughly $100 million settlement at Trump's September 2025 White House meeting with Erdogan; it could not establish the U.S. response or whether those talks continued.⁷ The final agreement required no financial penalty from the bank and no admission of criminal wrongdoing.³

The concessions reached Treasury: the agreement released claims by its sanctions office, OFAC, for the indicted conduct and stated that none were pending.³ Its special ban on Iran-related transactions involving U.S. persons lasted only until dismissal.³ In return, Halkbank promised to answer Treasury's compliance questions and help enforce orders against Zarrab's assets, giving up its claims to them where Turkish law and court orders allowed.⁹³ The public docket also records a July 14, 2026 judgment ordering Zarrab to forfeit his interest in a boat valued at $288,690 and currency valued at $88,102.59.¹⁰

Terrorism Victims Got No Bank Payment

In a letter filed June 17, Gibson Dunn lawyer Robert Weigel told Judge Richard Berman that his firm represented 1,121 terrorism victims and surviving family members with over $10 billion in unsatisfied federal judgments against Iran.⁵ The lawyers alleged that Halkbank disguised Iranian funds and put assets beyond their clients' reach while their lawsuits were pending.⁵ They argued that DOJ denied their clients' rights under the Crime Victims' Rights Act by negotiating the deal without notice or consultation, despite requests beginning in 2021, and asked Berman to withhold dismissal until the victims could be heard and confer with the government.⁵

A bank penalty could have supported compensation: GAO explains that the U.S. Victims of State Sponsored Terrorism Fund receives all qualifying criminal fines, penalties and forfeiture proceeds, including sanctions-related offenses involving a state sponsor of terrorism.¹¹ The indictment had also sought forfeiture from Halkbank: the proceeds of the charged offenses and the property involved in the alleged money laundering.² The indictment also sought substitute bank assets up to the value of the forfeitable property if the bank's acts or omissions made that property unavailable under the specified conditions.² Dismissal ended those demands against Halkbank in this criminal case without determining how much could have been recovered; the alleged $20 billion transfer volume was not a guaranteed recovery.²¹ The concrete loss was an enforcement opportunity: DOJ ended the bank's criminal case without obtaining a financial penalty that could replenish the victims' fund.³¹¹¹

The agreement left others free to seek relief from the bank.³ The victims' lawyers described the barrier: a judge conditionally dismissed their U.S. suit in 2021 in favor of litigation in Turkey, without deciding its merits, and an appeals court affirmed.⁵ Turkish lawyers and experts, counsel said, advised that they could not retain qualified counsel willing to bring the politically charged case there.⁵

Hostages Returned; Stable Peace Had Not Followed

The government's defense is substantial: resolving a prosecution can serve a national-security objective beyond the case itself.¹ Lockard said Turkish assistance was instrumental in the Gaza ceasefire and Hamas's commitment to release all remaining hostages; Trump and other leaders announced the agreement on October 13, 2025.¹ DOJ argued that dismissing Halkbank advanced those efforts and a stable peace.¹

The hostage returns were real: the ICRC reported that its operation transferred 20 living hostages in October 2025.¹² It was complete by January 29, 2026, after Israeli authorities recovered the final deceased hostage's remains.¹² Stable peace had not followed: a UN report of October 2, 2026, described coordinator Ramiz Alakbarov's September 28 briefing on daily airstrikes in densely populated areas of Gaza.¹³

The hostage operation was complete before the March agreement and June dismissal; Lockard described the earlier commitment to resolve Halkbank as part of the diplomacy.¹²¹ Those results do not establish that a bank penalty or forfeiture had to be waived to secure the returns.¹²¹³

The bank also completed its required review: with government approval, it retained EY's Turkish affiliate and delivered the report on May 11, 2026.⁹ The June 10 joint filing said Halkbank had satisfied its obligations.⁹ The bank's lawyers' summary of the report was favorable: no areas of noncompliance, plus screening, monitoring and training improvements.⁹ EY checked all dollar transactions in 2025, the summary said, and found no completed transfers involving OFAC-designated parties.⁹

U.S. intermediary banks did block four attempted transfers, totaling less than $41,000, that Halkbank had not initially flagged.⁹ The parties were not designated Foreign Terrorist Organizations or Specially Designated Global Terrorists, and EY found no indication of intentional concealment, evasion or a repeated pattern in those attempts.⁹ Halkbank also disclosed and declined three Iran-related requests during the review period, and EY found no requests or transactions beyond those reported.⁹ But the review covered Treasury communications and current controls; the indictment alleged conduct from 2012 through 2016.⁹¹

A Permanent End

Berman approved the government's request on June 17, 2026, permanently ending the bank's charges without trial.¹⁴ Reuters noted that judges have little discretion to reject such agreements and reported that Berman did not address the absence of a penalty at the dismissal hearing.⁴ Halkbank shares rose as much as 8.4% after dismissal, Reuters reported.⁴ The public docket, last updated October 2 and listing filings through August 20, shows no later order reopening the prosecution.¹⁰

Five senators wrote in an April 15, 2026 oversight letter that every other publicly announced deferred prosecution agreement by this administration had required millions of dollars in fines or forfeiture, except when the defendant could show an inability to pay.¹⁴

The abuse charged here is selective relief for a foreign leader's state bank. Trump's diplomacy helped end a prosecution alleging approximately $20 billion in sanctions evasion, along with official bribery, with no bank penalty or admission.¹²³ The cost was a trial and a criminal enforcement opportunity that could have supported victims' compensation.¹²³⁵¹¹