The United States government on Monday agreed to resolve its long-running criminal case against Turkish state lender Halkbank through a deferred prosecution agreement that would end allegations it helped Iran evade sanctions, easing a diplomatic dispute with Turkey while imposing new compliance restrictions on the bank.

The agreement, filed in Manhattan federal court, requires the lender to hire an independent monitor to review its sanctions and anti-money laundering controls and bars it from conducting transactions that benefit Iran. The deal must be approved by US District Judge Richard Berman, who is overseeing the case and has scheduled a hearing for March 11.

The settlement would close a prosecution launched in 2019 by US authorities, who accused the bank of fraud, money laundering and conspiracy for allegedly helping Iran circumvent American economic sanctions. Prosecutors said the scheme involved the covert transfer of about $20 billion in restricted funds, including converting Iranian oil revenues into gold and cash and documenting fictitious food shipments to justify transfers.

In a letter to the court, Manhattan US attorney Jay Clayton said the resolution advances Washington’s security objectives. “This agreement by Halkbank furthers the United States’ compelling interests in combatting terrorist financing and financial support for the Government of Iran,” Clayton wrote.

Halkbank said in a statement that it does not admit criminal wrongdoing and that the arrangement would fully resolve the case without financial penalties. The bank added that the outcome could improve its access to international funding and correspondent banking relationships once the matter is concluded.

According to Reuters, the settlement could ease tensions between Washington and Ankara that have lingered since the case began during the first presidency of Donald Trump. Turkish president Recep Tayyip Erdoğan had previously criticised the indictment as unlawful and pushed for a negotiated resolution.

Markets responded positively to the development. Halkbank’s shares listed in Istanbul closed up 10 per cent on Monday, the maximum daily rise permitted on the exchange after the court filing referenced the deferred prosecution agreement.

Hakan Akbas, managing director at Strategic Advisory Services, told Reuters that the settlement removes a significant political and legal obstacle. “It closes a long and costly legal chapter while strengthening compliance standards,” he said.

The case formed part of a wider set of prosecutions connected to alleged sanctions evasion involving Iranian funds. In earlier proceedings, Turkish-Iranian gold trader Reza Zarrab pleaded guilty in the United States in 2017 and testified against former Halkbank executive Mehmet Hakan Atilla, who was convicted in 2018 and later returned to Turkey after serving most of a 32-month prison sentence.

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