Lawmakers Demand Answers After DOJ’s Deferred-Prosecution Deal with Turkey’s Halkbank

Lawmakers are pressing the Justice Department to explain why it quietly moved to end a landmark criminal case against Turkey’s state-owned Halkbank with a deal that imposes no fine, requires no admission of guilt and could wipe away charges over alleged $20 billion in Iran sanctions evasion.

On Tuesday, Rep. Adam Schiff, a California Democrat and former chair of the House Intelligence Committee, accused Donald Trump of intervening on Halkbank’s behalf and called for oversight of the decision. In a social media post, Schiff said Trump “called off a criminal case against a Turkish bank accused of laundering over $20B for Iran to evade sanctions” and called the outcome a “betrayal of American victims of Iranian state-sponsored terror.”

“We need answers from Trump’s DOJ about this betrayal of American victims of Iranian state-sponsored terror,” Schiff added. Bloomberg reported the same day that the settlement is drawing questions from lawmakers.

The controversy centers on a deferred prosecution agreement, or DPA, that federal prosecutors in Manhattan reached with Turkiye Halk Bankasi A.S., known as Halkbank. The agreement was filed in federal court and unsealed around March 9 and, according to Turkish regulatory disclosures cited by local media, took effect March 12.

Under a DPA, prosecutors put a case on hold while a company meets certain conditions; if the company complies, the charges can later be dismissed. In court filings supporting the Halkbank deal, the Justice Department said it was driven by “unique and extraordinary national security and foreign policy considerations.” The department wrote that “this unique and substantial public interest in supporting the release of the hostages weighed heavily in the government’s assessment of the appropriate resolution of this case.”

The Halkbank agreement requires the Turkish lender to hire a mutually agreed third party to examine its compliance with U.S. sanctions and anti-money-laundering rules. That reviewer must prepare a report for the Treasury Department’s Office of Foreign Assets Control, which enforces sanctions, and for the U.S. Attorney’s Office for the Southern District of New York.

After that compliance report is submitted, the Justice Department and the bank will “request dismissal” of the criminal case, according to public descriptions of the deal. Halkbank will not admit criminal wrongdoing as part of the arrangement, and it will not pay judicial or administrative fines, according to contemporaneous reporting by Turkish and international outlets that reviewed the agreement.

Jay Clayton, the U.S. attorney in Manhattan at the time of the filing, told the judge overseeing the case that prosecutors stand behind the outcome. In a letter quoted by Turkey’s Anadolu news agency, he wrote that the Justice Department “believes the resolution of these charges against Halkbank on the terms and conditions set forth in the Agreement is in the best interests of the United States.”

Halkbank, one of Turkey’s largest state-owned banks, publicly welcomed the deal and stressed its commercial upside. In a statement quoted by Al Jazeera, the bank said: “This development is expected to positively impact our bank’s financial structure by expanding its foreign funding opportunities, correspondent network, and access to international markets.” The bank also emphasized it would not admit guilt and portrayed the DPA as a step toward normalizing its access to global finance.

The underlying case is among the most significant U.S. criminal prosecutions ever brought over Iran sanctions. Prosecutors alleged that Halkbank helped Iran secretly move roughly $20 billion through front companies and disguised transactions, including schemes that converted Iranian oil revenue into gold and cash for the benefit of Iranian interests.

The indictment charged the bank with conspiracy, bank fraud and money laundering tied to Iran sanctions evasion. Halkbank has denied wrongdoing. Earlier cases stemming from the same investigation led to a guilty plea from Turkish-Iranian gold trader Reza Zarrab and a 2018 conviction in New York of former Halkbank deputy general manager Mehmet Hakan Atilla.

Halkbank itself was indicted in October 2019 after years of investigation and diplomatic friction between Washington and Ankara. The bank argued it was immune from prosecution as an arm of a foreign state, but U.S. courts, including the Supreme Court in 2023, rejected broad immunity claims and allowed the criminal case to proceed.

The DPA, coming after that long legal fight, drew immediate scrutiny in the courtroom. U.S. District Judge Richard Berman of the Southern District of New York, who has overseen the Halkbank matter, questioned the terms of the agreement, including why a major, state-owned bank accused of facilitating sanctions evasion on that scale would not pay any monetary penalty, according to Turkish media accounts of the hearing.

Assistant U.S. Attorney Michael Lockard responded that the court had no authority to review or second-guess the substance of the agreement on foreign policy or national security grounds, underscoring that such judgments rest with the executive branch.

The resolution is also entangled in the long and sometimes personal diplomacy between Trump and Turkish President Recep Tayyip Erdoğan, whose government is a key NATO ally but has drawn criticism from Western officials and rights groups over democratic backsliding. The Halkbank case has been a recurring irritant in U.S.-Turkey relations, with Ankara lobbying for years to limit the fallout.

According to an October 2025 Reuters report, Erdoğan told reporters that, after discussions with Trump, the U.S. president had assured him “the Halkbank problem is finished for us.” That comment, Erdoğan’s account of a private conversation, has taken on new significance now that the Trump administration’s Justice Department has negotiated a deal that could end the case without a conviction, fine or admission of guilt, and while DOJ itself cites foreign policy considerations in explaining the outcome.

Schiff’s criticism places the Halkbank agreement squarely in the middle of a broader debate over how far the United States should go in using criminal prosecutions as leverage in diplomatic negotiations, especially when U.S. sanctions enforcement against Iran is at stake. For lawmakers pressing for oversight, the concern is whether a case that once involved a multibillion-dollar alleged scheme and senior Turkish officials was ultimately steered less by prosecutors and courts than by geopolitical bargaining.

If Halkbank meets its obligations under the DPA, the Justice Department and the bank are expected to jointly ask Judge Berman to dismiss the charges. That looming dismissal is fueling demands in Congress for a public accounting of how and why one of the most consequential Iran sanctions cases in U.S. history is poised to end with no financial punishment and no formal finding of guilt.