Turkish banker Mehmet Hakan Atilla, a prominent ally of Turkish President Recep Tayyip Erdogan, came to New York this week to school investors on his state bank’s plans to sell new dollar bonds.

Instead, he was placed under arrest by U.S. authorities and accused of conspiring to violate U.S. sanctions on Iran by teaming with wealthy Turkish gold trader Reza Zarrab to funnel hundreds of millions of dollars of illegal transactions through U.S. banks to Iran’s government.

“United States sanctions are not mere requests or suggestions; they are the law,” Acting U.S. Attorney Joon Kim said in a statement in New York, where Atilla was arraigned Tuesday.

He was arrested at New York’s John F. Kennedy International Airport on Monday.

Gold, currency allegedly sent to Iran

Atilla “protected and hid Zarrab’s ability to provide access to international financial networks,” U.S. authorities said in documents filed in the U.S. court. The documents allege that gold and currency were sent to Iran, while documents were forged to disguise the transactions as food shipments so as to comply with humanitarian exceptions to the sanctions law.

Atilla’s arrest and the case of Zarrab — arrested last year in Florida — drew a sharp rebuke from the Turkish government, which said it planned to raise the matter with U.S. Secretary of State Rex Tillerson when he visits Ankara this week, Turkish Foreign Minister Mevlut Cavusoglu told Turkish media.

Relations between the U.S. and Turkey are frayed over the Syrian civil war and Turkish demands for the extradition of Islamic cleric Fethullah Gulen, whom the Turkish leadership blames for July’s failed coup in Turkey.

Diplomatic dispute?

In terms of the impact of the recent development on the U.S. Turkish relationship, some analysts suggest it could potentially be an issue as the two sides view the case through different lenses.

“For the U.S., it is a case of sanctions law violation,” said Ihan Tani, a journalist who follows U.S.-Turkish relations. “But some people close to the Turkish president seem to be involved with Reza Zarrab.”

Tani added that because of the involvement of close aides of the Turkish president, the issue could escalate into a diplomatic dispute.

But Tani said Atilla knew that U.S authorities viewed him as a potential suspect.

“He knew that he was part of the U.S. investigation here. So why did he come to this country? It is hard to understand. If he took a risk, now he is paying for it,” Tani said.

The U.S. attorney’s office in Manhattan declined to comment on his motives to travel to the U.S.

Lender’s shares drop

The arrest could have major financial implications for Turkish state lender Halkbank. Bank shares posted their biggest one-day fall on Wednesday.

Halkbank, Turkey’s fifth-largest bank in terms of assets, vowed to investigate.

“Our bank and relevant state bodies are conducting the necessary work on the subject, and information will be shared with the public when it is obtained,” Halkbank said in a statement.
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