Halkbank, the large Turkish state-owned bank that has been accused in the US of substantial sanctions violations, has pleaded not guilty at a Manhattan court to criminal charges that it helped Iranian entities illicitly transfer tens of billions of dollars in a scheme that used trade-based financial crimes to evade sanctions.
In February Halkbank agreed to appear in Manhattan federal court for arraignment after refusing to appear for months to face charges stemming from allegations that its officers helped dual Iranian-Turkish national gold trader, Reza Zarrab, “use US financial institutions to engage in prohibited financial transactions that illegally funnelled millions of dollars to Iran”.
Front companies
Prosecutors allege that Halkbank and its “officers, agents, and co-conspirators directly and indirectly used money service businesses and front companies” in Iran, Turkey and the UAE.
The front companies are alleged to have issued invoices that appeared to relate to shipments of food and medicine that were classed as goods excepted from US sanctions on humanitarian grounds.
But according to prosecutors, the goods actually shipped were a variety of commodities including gold and gas.
Over-invoicing
The bank has also been under scrutiny in Turkey where prosecutors in 2013 said Halkbank facilitated a transaction to finance a shipment of 5.2 tons of brown sugar to Iran’s Bank Pasargad, with delivery to Dubai.
In a clear case of over-invoicing the sugar was invoiced at 1,170 Turkish lira – or the equivalent of around US$240 per pound.
Categories: Trade Based Financial crimes News
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