To Squeeze Iran, Washington Must Go After Halkbank

When U.S. Treasury Secretary Scott Bessent launched Operation Economic Outcast against Iran, he promised to target its “enablers” and “sever every economic lifeline that sustains this tyrannical regime until Tehran stands alone.” Washington has since sanctioned everything from foreign banks to Iranian airlines. Yet it has spared one of the most prominent institutions ever accused of helping Iran evade U.S. sanctions: Turkey’s state-owned Halkbank. This Iranian lifeline, too, must be severed.

In one of the biggest sanctions-evasion cases ever, U.S. prosecutors charged in 2019 that, between 2012 and 2016, Halkbank violated U.S. sanctions by transferring roughly $20 billion in Iranian oil proceeds into gold and cash while disguising the transactions as legitimate food trade. Washington spent years prosecuting Halkbank, only to settle the case through a deferred prosecution agreement in March and drop it in June without the bank paying a fine or admitting to any wrongdoing.

Halkbank’s reprieve, according to Justice Department filings, was tied to Turkey’s help in brokering the October 2025 ceasefire in Gaza. With this trade, Washington told Ankara that it can buy immunity from U.S. sanctions enforcement and signaled to Tehran that Turkish banks remain a safe channel for its money.

Turkey and Iran got the message. A financial architecture like the one that enabled Halkbank’s sanctions evasion once again operates from Turkey.

On September 4, the Treasury said Istanbul-based Golden Global Yatirim Bankasi was established to enable Iran’s rahbar network—the front companies Iran’s sanctioned banks use to move money abroad—to transfer oil revenues from China to Turkey, where exchangers could convert them into cash and gold and move them to Iran. That is the route Halkbank was accused of running a decade earlier.

And, soon, Halkbank itself could restart funneling money to Iran. Turkey’s 25-year gas contract with Iran expired in July, but the pipeline network in eastern Anatolia was built around Iranian supply and Iranian gas met nearly 13 percent of Turkish consumption. Neither government has said whether the contract’s automatic five-year extension was triggered. But if it was, Halkbank, which historically processed Turkey’s payments for Iranian energy, could again be handling Iranian revenue.

Despite this exposure of its financial institutions to Iranian sanctions evasion, Ankara has acted only when Washington applies pressure. On September 18, Turkish regulators revoked the operating license of Bank Mellat’s Istanbul branch, an Iranian state lender under U.S. sanctions that Turkey had allowed to operate for years. Two days earlier, regulators placed nearly all shareholder rights at Golden Global under state control, roughly two weeks after the U.S. designation. When the Treasury went after Iran’s aviation sector, Ankara halted Mahan Air flights and Turkey’s flag carrier Turkish Airlines suspended flights to Iran. Yet, none of these steps touched Halkbank or the exchange houses that convert Iranian revenue into gold, and Iranian trade still moves through Turkish intermediaries and informal networks.

Washington, too, so far, seems uninterested in Halkbank, or Turkey’s, possible role in aiding Iran, even after Economic Outcast began. After the Golden Global designation, U.S. Ambassador to Turkey Tom Barrack stressed that the action was no indictment of Ankara, saying “the health of the Turkish financial system is not in question.” That reassurance clashes with the Treasury’s warning that foreign institutions facilitating Iranian sanctions evasion risk losing access to the U.S. financial system. A warning that loses force if it stops at institutions with clout in Washington.

Washington should apply pressure most forcefully on Halkbank to close the channel Iran has used before for its energy revenue and show Ankara that political influence no longer buys exemption from U.S. law. After all, American pressure has worked in Ankara before. In 2018, sanctions on two Turkish ministers and higher steel and aluminum tariffs secured the release of detained American pastor Andrew Brunson that October.

First, the Treasury should require Halkbank, as a condition of its access to U.S. correspondent banks, to accept a U.S.-selected monitor with access to any accounts held for Iranian entities, a safeguard the deferred prosecution agreement left to a reviewer of Halkbank’s own choosing.

Second, the Treasury’s Financial Crimes Enforcement Network should publicly state that any Iranian payment routed through Halkbank outside a transparent, U.S.-monitored channel will trigger a Section 311 finding—which can bar U.S. banks from maintaining correspondent accounts for the targeted institution—as it has already proposed for Banque Misr’s United Arab Emirates branches. More broadly, Washington should hold the Turkish state responsible for the conduct of the banks it owns and the exchange houses it regulates.

Economic Outcast rests on the premise that no foreign institution can safely facilitate Iran’s access to international finance. That premise holds only if it applies to the largest state banks of an American ally, which just so happens to have been one of Iran’s largest economic lifelines. That lifeline must be severed.