Turkey's public lender Halkbank on Tuesday pleaded not guilty to criminal charges in a federal court in Manhattan, who accused it of helping Iran evade U.S. sanctions, in a case that has strained U.S.-Turkey relations.

The plea was entered by the bank's U.S. lawyer at a hearing conducted by teleconference because of the coronavirus pandemic.

The case accused Halkbank of using money servicers and front companies in Iran, Turkey and the United Arab Emirates (UAE) to evade sanctions through sham transactions in gold, food and medicine.

The bank in late February agreed to enter the formal plea of not guilty to the charges, backing down from its previous refusal to answer the allegations.

A court in early December denied Halkbank's request to make a "special and limited appearance" to have the case dropped without having to formally participate in the proceedings.

District Court Judge Richard Berman asked the King & Spalding law firm to gain written authorization from the bank to proceed.

The bank's change came after U.S. prosecutors asked the judge to hold the bank in contempt for failing to respond and impose heavy fines, beginning at $1 million per day and doubling each week.

The charges against Halkbank, announced last October, followed related charges brought by U.S. prosecutors against nine individuals since 2016. They included former Halkbank executive Mehmet Hakan Atilla, who was convicted in January 2018 after another defendant, Turkish-Iranian gold trader Reza Zarrab pleaded guilty and testified against him.

Atilla returned to Turkey last year after leaving prison and became general manager of the Borsa Istanbul Stock Exchange (BIST).