The US Congress will press ahead with a broad package of sanctions on Turkey, including cutting military support, after measures announced by the Trump administration were dismissed as ineffective, Senate officials have confirmed.

The Republican senator Lindsey Graham and Democrat Chris van Hollen are expected to launch a bipartisan bill on Tuesday aimed at forcing the Turkish president, Recep Tayyip Erdoğan, to halt his military campaign in north-eastern Turkey, amid reports of widespread human rights abuses and the release of Isis militants who had been detained there.

The Senate bill would impose restrictive measures on Turkey’s political leadership and Turkey’s domestic energy sector. It would also prohibit US military support to Turkey, a Nato ally.

Donald Trump, widely blamed even by normally loyal supporters for giving a green light to the Turkish invasion, had sought to head off congressional sanctions and regain the initiative with an executive order on Monday.

On Tuesday, the justice department announced new criminal charges against a major Turkish bank for what was described as a multi-billion dollar sanctions busting scheme. Halkbank was charged with fraud, money laundering, and sanctions offenses, for the scheme which involved selling Iranian oil for gold.

“Halkbank’s systemic participation in the illicit movement of billions of dollars’ worth of Iranian oil revenue was designed and executed by senior bank officials,” a justice department statement said. “The bank’s audacious conduct was supported and protected by high-ranking Turkish government officials, some of whom received millions of dollars in bribes to promote and protect the scheme.”

It was unclear whether the unveiling of the charges was in any way coordinated with the sanctions and steep dip in US-Turkish relations. The US has already sentenced the bank’s general manager, and a gold trader, Reza Zarrab, who pleaded guilty and offered cooperation.

Zarrab was a client of Trump’s personal lawyer, Rudy Giuliani, and it was revealed at the weekend that Trump had repeatedly tried to persuade the former secretary of state, Rex Tillerson, to have the case against him dropped.

Trump’s executive order on Monday imposed a 50% tariff on imports of Turkish steel, called off what officials called a $100bn bilateral trade deal and gave the state department and Treasury wide powers to impose targeted sanctions on Turkish officials.

However, both administration critics and sanctions analysts said the administration proposal looked more imposing than it was in reality. The White House has yet to rescind a White House invitation to Erdoğan which Trump offered to the Turkish president after being informed of the imminent offensive. And Trump’s sanctions package does not affect US military support to Turkey.

Furthermore it was unclear whether a $100bn trade deal administration officials said had been shelved had ever existed in the first place.

Daniel Tannebaum, a former sanctions official, now head of sanctions at Oliver Wyman management consultants, said: “There has not been any evidence of a deal matching what was described. So there were some shoulder shrugs when this was announced. People asked: ‘What are you referring to?’”

Senator van Hollen called the Trump measures a “pathetic response”, pointing out that steel exports to the US were a fraction of one per cent of Turkey’s total exports. The Trump administration also has a record of slow-rolling sanctions against regimes where the president believes he has a strong personal relationship with the leader, such as Russia and Saudi Arabia.

Turkish equity markets spiked when markets opened on Tuesday, in an apparent sign of relief at the limited nature of the US response to the Syria invasion.

In Washington the House speaker, Nancy Pelosi, said: “President Trump has unleashed an escalation of chaos and insecurity in Syria. His announcement of a package of sanctions against Turkey falls very short of reversing that humanitarian disaster.”

Peter Harrell, former deputy assistant secretary of state for counter threat finance and sanctions, said: “The executive order has the potential to really be quite broad and impose quite draconian sanctions, but the targets the administration has picked to date have been low to mid-range … So I think there’s sort of a substantive concern that the president doesn’t actually intend to be particularly aggressive here.”

The most important difference between the congressional and administration sanctions packages could be the issue of military support. The Turkish army and air force is largely reliant on the US to keep up operations. Administration officials have been hesitant about imposing such military sanctions, for fear of pushing Turkey out of Nato altogether, though critics have argued that it has ceased to be an ally in any meaningful sense anyway.

“If the Trump administration were truly serious about rolling back Turkey’s invasion of Syria, it would immediately cut off all US arms supplies to the Turkish military, including spare parts and maintenance,” William Hartung, director of the arms and security project at the Center for International Policy.

“Turkey relies on the US for all of its combat aircraft and two-thirds of its armoured vehicles, so a full withdrawal of US support could degrade its fighting capability. And it would send a stronger message than the minimal economic measures the administration has taken thus far.”