The US’s long-running criminal prosecution of Turkish state-run lender Halkbank over the evasion of sanctions on Iran is to end with a deferred prosecution agreement, if the move is approved by a judge.

The US government announced the agreement on March 9, stating that the accord would advance Washington's interest in curbing support for ​Iran.

Turkey’s President Recep Tayyip Erdogan has controversially lobbied US counterpart Donald Trump during both his terms in the White House to drop the prosecution.

The case centres on allegations that Halkbank assisted Iran in dodging American economic sanctions. Erdogan once called the case unlawful and "ugly", but how much he knew of Halkbank’s activities in relation to the allegations made by US prosecutors has remained a key question throughout the investigation and subsequent indictment. Erdogan has always denied having any knowledge of Halkbank activities deemed in breach of sanctions.

Reuters reported that the deferred prosecution agreement filed in a Manhattan federal court forbids Halkbank from taking part in transactions that benefit Iran and requires it to hire a monitor who is to review its sanctions and anti-money-laundering compliance.

No money will change hands, ​while the charges will likely be dismissed after the monitor reviews the compliance, the agreement is said to state.

"This agreement by Halkbank furthers the United States' compelling interests in combatting ​terrorist financing and financial support for the Government of Iran," US Attorney Jay Clayton in Manhattan said in a letter to US District ⁠Judge Richard Berman, who is overseeing the case.

Clayton added that the agreement strongly serves the public interest by furthering the US government's national security interests in combatting money laundering and terror finance.

Clayton asked the judge to adjourn a scheduled March 11 status conference.

Turkish officials proposed resolving the case for some $100mn during a September meeting between Erdogan and Trump at the White House, two sources told Reuters in October.

Halkbank put out a statement saying it is not admitting to any criminal wrongdoing. It added that the agreement would completely end the case.

Reuters quoted Hakan Akbas, managing director at Strategic Advisory Services, a ​consultancy firm, as saying that the agreement "closes a long and costly legal chapter while strengthening compliance standards. Trump and Erdogan appear to be steadily clearing major disputes from the US-Turkey agenda."

Halkbank was in 2019 hit with fraud, money ‌laundering and conspiracy charges ⁠for allegedly facilitating the use of money servicers and front companies for Iran in Iran, Turkey and the United Arab Emirates.

Prosecutors alleged the bank clandestinely transferred $20bn of restricted funds, while also converting oil revenue into gold and cash to Iran’s benefit. Fake food shipments were allegedly documented to justify transfers of oil proceeds.

Halkbank pleaded not guilty.

A case brought against Turkish-Iranian gold trader ⁠Reza Zarrab and another against former Halkbank executive Mehmet Hakan Atilla inter-connected to the Halkbank case.

Zarrab pleaded guilty to bank fraud, money laundering and conspiracy charges in 2017 and implicated Erdogan in his evidence. However, he turned state’s witness and has not been sentenced. In 2018, he testified against Atilla. The same year, Atilla was convicted of bank fraud and conspiracy charges. He returned to Turkey in 2019 after completing most of a 32-month prison term and was made director general of the Borsa Istanbul. He has always denied wrongdoing.