US-Halkbank case: Judge set to consider settlement terms.

A Turkish state-owned bank, Halkbank, faced charges in 2019 for allegedly facilitating Iranian evasion of US sanctions.

On Wednesday, a federal judge will weigh in on the proposed settlement between the US government and Halkbank, which aims to settle allegations that the Turkish bank assisted Iran in circumventing US economic restrictions imposed by the Justice Department.

Relations between NATO allies Turkey and the US have been strained due to ongoing charges, which date back to 2019. A proposed settlement has generated excitement among investors, with Halkbank's stock price surging on the Istanbul market following its announcement in March.

Judge Richard Berman of the Manhattan-based U.S. District Court suspended proceedings for 90 days to enable Halkbank to prove its adherence to the settlement agreement. This entails refraining from facilitating transactions with Iranian interests and submitting to external monitoring of sanctions and anti-money laundering protocols.

On June 10, a deadline expired for dismissal discussions between the Manhattan U.S. Attorney's office and Judge Berman, with prosecutors requesting formal closure after reviewing findings from Ernst & Young's monitoring efforts regarding Halkbank.

A court hearing is slated for this Wednesday at 9 a.m. EDT, where Berman will review the proposal.

US judges enjoy limited leeway in declining the conditions of deferred prosecution deals, like the one negotiated by the US Justice Department with Halkbank.

The settlement terms will be reviewed by a judge without any financial transactions taking place. A recent court session on March 11 saw Berman mention a letter he had received from a advocacy group, which expressed concern over the lack of monetary penalties, though he chose not to address this specific point.

US authorities alleged that Halkbank engaged in clandestine transactions, moving $20 billion in restricted funds by converting oil revenue into gold and cash for the benefit of Iranian entities through falsified documentation.

Halkbank has maintained its innocence throughout the proceedings. Turkish President Recep Tayyip Erdogan previously described the case as unjust and "unseemly". The current diplomatic climate between the two nations is more cordial than at any point in recent years, dating back to Trump's presidential reinstatement in 2022.

Following his meeting with US President Donald Trump last year, Turkish President Erdogan voiced optimism about resolving the Halkbank issue. In October, Erdogan revealed that Trump had assured him during their September White House encounter and subsequent phone conversation that "the Halkbank matter is settled for us."

Announcement of the settlement came on the heels of hostilities escalating between the US and Iran in early February, aligning with Washington's goal to limit Iranian backing.