Turkey’s state-run lender Ziraat Bank, which is also the biggest bank in the country, has shut down its only branch in New York amid the speculations about it as related to the case over the Iranian-Turkish gold trader Reza Zarrab in New York.
According to reports in Turkish media on Tuesday, Ziraat Bank ceased operations at its branch in the city in June and has now closed the office down entirely, reported by Cumhuriyet daily. The business in 42nd street was not listed among foreign representative branches on its website on Tuesday.
Ziraat Bank, owned by Turkey’s sovereign wealth fund since last year, has been implicated in a fictitious gold-trading scheme by Zarrab, who has appeared as a key witness in the New York trial of an employee of another Turkish state-run lender, Halkbank. Turkey’s government has dismissed the prosecution’s case as fictitious.
Ziraat Bank’s New York branch, which was subjected to strict US Federal Reserve (FED) inspections over accusations of illegal money transfers, told its customers that it is quitting retail banking in November 2014. The bank’s New York branch had sent letters to its customers, announcing that it quitted retail banking and asking them to close their accounts. However, the bank had decided to continue corporate banking.
The US Federal Reserve (FED) requested that the Ziraat Bank provide a detailed audit revealing whether or not the bank had conducted illegal money transfers from firms blacklisted by the US to countries such as Iran and Sudan, in violation of US sanctions. The Fed had reached an agreement with Ziraat on July 1, 2014 stipulating that the financial institution would issue such a report within 60 days.
“Within 60 days of this agreement, the bank [Ziraat] shall jointly submit to the [FED] supervisors an acceptable written enhanced internal audit program for the [New York] branch that shall, at a minimum, provide for… a risk-based audit plan that encompasses all appropriate areas of audit coverage,” the agreement said.
The deal was signed by FED Senior Vice President Christopher Calabia and Ziraat Bank Executive Vice President Yüksel Cesur. However, the bank failed to submit an audit that would meet FED inspectors’ requests.
Ziraat Bank was operating in the US through its New York branch since 1983.