Geoffrey S. Berman, the United States Attorney for the
Southern District of New York, John C. Demers, the Assistant Attorney General
for National Security, and William F. Sweeney Jr., the Assistant Director in
Charge of the New York Field Office of the Federal Bureau of Investigation
(“FBI”), announced that TÜRKİYE HALK BANKASI A.S., a/k/a “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.
U.S. Attorney Geoffrey S. Berman stated: “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. 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.”
Assistant Attorney General for National Security John C.
Demers said: “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. 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.”
FBI Assistant Director-in-Charge William F. Sweeney Jr.
said: “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. 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[1]:
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 Office 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 October 26, 2017, Reza
Zarrab pled guilty to the seven counts with which he was charged. On January 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.
Mr. 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.
[1] As the introductory phrase signifies, the entirety of
the text of the Indictment and the descriptions of the Indictment constitute
only allegations, and every fact described should be treated as an allegation.
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