US prosecutors say Turkish assistance in negotiating ceasefire and release of captives in Gaza contributed to settlement.

The United States has tentatively agreed to drop a criminal case accusing Turkiye’s state-run Halkbank of participating in a multibillion-dollar scheme to evade sanctions against Iran.

In a document filed with the US District Court for the Southern District of New York on Monday, prosecutors said resolving the case would be in the “best interests” of the US government, a move that would end a years-long prosecution that has strained relations between Washington and Ankara.

Prosecutors said “unique and extraordinary national security and foreign policy considerations” contributed to the settlement, including Turkiye’s assistance in securing October’s ceasefire deal between Israel and Hamas and the release of Israeli captives held in Gaza.

“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 US Department of Justice said in the filing.

Halkbank will engage a mutually agreed-upon third party to review the lender’s sanctions and anti-money laundering compliance as part of the deal, the Justice Department said.

The bank will also refrain from “conducting or facilitating” any transactions with the Iranian government, Iranian people or Iranian entities that involve US people or financial institutions during the period of the agreement, according to prosecutors.

“This agreement by Halkbank furthers the United States’ compelling interests in combating terrorist financing and financial support for the Government of Iran,” prosecutors said.

Halkbank, which has its headquarters in Istanbul, said it had not admitted to criminal wrongdoing and would not pay any penalties under the settlement, which requires the sign-off of a judge.

“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 said in a statement posted on its website.

Halkbank’s Istanbul-listed shares on Monday rose 10 percent.

Turkiye had vigorously protested against the US case, with President Recep Tayyip Erdogan calling the original 2019 indictment “ugly” and “unlawful”.

US prosecutors had accused Halkbank of secretly transferring $20bn in Iranian funds in violation of Washington’s sanctions on Tehran.

Halkbank, which denied wrongdoing, had argued that it was protected from prosecution by sovereign immunity, taking its case all the way to the US Supreme Court, which rejected the lender’s appeal in October.