Shares in Turkey's state-controlled Halkbank closed 10% down on October 6 after the US Supreme Court declined to hear the lender’s latest appeal against a lower court ruling that it can be tried on criminal charges that it assisted Iran in dodging US sanctions.

Halkbank in May requested that the top court scrap the ruling on the basis that it should have sovereign immunity from prosecution as a state bank, but the Supreme Court decision on the matter means the criminal case brought by federal prosecutors in Manhattan in 2019 can proceed.

The Supreme Court announcement that it will not consider the case on appeal comes after, as reported by bne IntelliNews, Halkbank in July quietly returned to the eurobond market after a nine-year absence.

The bank is accused of helping evade sanctions in laundering at least a billion dollars that went through the American financial system.

Turkey’s president, Recep Tayyip Erdogan, who referred to the prosecution as an “unlawful, ugly” step when it was announced six years ago, tried to have the case dropped by making personal appeals to Donald Trump when he was serving his first term as US president. It is believed he also discussed the issue with Trump when he met him at the White House on September 25 and told media he was expecting a reset in Turkey-US relations.

Questions have long been raised about what Erdogan knew about the claimed sanctions-busting conspiracy, though he has always denied any wrongdoing. The 2019 indictment alleged wrongdoing right to the top of his administration. At one point, after failing to send representation to a hearing, Halkbank was deemed to be a “fugitive” by prosecutors.

Manhattan federal prosecutors claim Halkbank covertly transferred $20bn of restricted Iranian funds, with $1bn or more violating US federal law by passing through the American financial system. Fines for the offence can run up to twice the transaction value.

Halkbank said in a Borsa Istanbul filing that the Supreme Court’s decision “does not mean that the legal proceedings are finalised”.

“Initiatives to find a legal consensus within the framework of agreements between the United States and Türkiye are also continuing in a positive direction,” it said.

The bank in arguing that it is immune from prosecution as an institution more than 90%-owned by the Turkish state, also contends that its conduct took place outside the US and that it is beyond the jurisdiction of US courts. A federal appeals court rejected its immunity defence last year.

In March 2016, the US investigators arrested Turk Reza Zarrab in Miami. He was accused of being a central figure in the sanctions-busting scheme that breached American sanctions on Iran between 2012 and 2013.

Zarrab later on turned state witness. Nowadays, he is running a horse farm in the US.

In March 2017, the US judiciary arrested Halkbank’s then deputy general manager Hakan Atilla, who was in the US for a eurobonds roadshow.

In 2017, Trump, whose first term in the White House stretched from January 2017 to January 2021, fired the prosecutor, namely Preet Bharara, who was conducting the Halkbank case.

Turkey’s sovereign wealth fund (TWF/TVF) controls a 91.5% stake in Halkbank, while the remaining 8.5% is listed on Borsa Istanbul.