On October 1, 2020, the SDNY District Court issued an important ruling in U.S. v. Halkbank, holding that foreign state-owned entities (“SOEs”) can be subject to criminal jurisdiction in the United States.
The Court denied the defendant Turkish state-owned bank’s motion to dismiss an indictment charging it with conspiracy, bank fraud, and money laundering in connection with allegedly processing $20 billion in Iranian oil and gas proceeds through the U.S. and international financial systems in violation of U.S. sanctions against Iran.
With this decision, the SDNY joins three Circuit courts that have addressed the unsettled issue by ruling that the Foreign Sovereign Immunities Act (“FSIA”) does not preclude a U.S. court from exercising criminal jurisdiction over a foreign sovereign instrumentality.
The Halkbank Court went a step further, rejecting Halkbank’s defenses related to common-law sovereign immunity, constitutional due process, and extraterritoriality. In addition to expanding the scope of liability that foreign SOEs may face in U.S. court, the decision is also notable for its strengthening of prosecutorial discretion on questions of foreign sovereign immunity.
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