The US Department of Justice said it had charged Turkey's Halkbank with six counts of fraud, money laundering, and sanctions offenses

Washington (AFP) - The US Supreme Court will hear arguments Tuesday in an appeal by Turkey’s Halkbank against US charges that it violated sanctions on Iran.

The bank wants the high court to rule on its claim that as a state-owned bank it has immunity under the US Foreign Sovereign Immunities Act.

Halkbank was hit with criminal charges in 2019 that it took part in a year-long scheme to launder billions of dollars worth of Iranian oil and natural gas proceeds, violating US sanctions on Iran.

The funds were used to buy gold and the transactions were disguised as food and medicine purchases in order to fall under a humanitarian exemption to the sanctions, according to court documents.

Halkbank allegedly used front companies to funnel $20 billion to Iran, including $1 billion through the US financial system, according to the US case.

The Department of Justice said it had charged the bank with six counts of fraud, money laundering, and sanctions offenses, calling it one of the most serious sanctions-breaking cases it has seen.

Halkbank says that the Foreign Sovereign Immunities Act, which protects foreign leaders and governments from lawsuits in the United States, extends to state-owned businesses.

US courts have disagreed, and the issue is now to be decided by the Supreme Court.

But the case is underpinned by the politics of US relations with Turkey, a NATO ally and an important power in Middle East politics.

Turkish President Recep Tayyip Erdogan has repeatedly rejected the charges against the bank, saying Turkey did not violate the US embargo on Iran and that political rivals were behind the case.

Multiple individuals have already been found guilty in the case, including Mehmet Hakan Atilla, a deputy director general of the bank, who was convicted in 2018.

Atilla was jailed for a year and then released in 2019, and was greeted as a hero upon his return to Turkey.