Legs and Regs

The Financial Action Task Force (FATF) published its mutual evaluation report regarding Turkey’s anti-money laundering (AML) and counterterrorist financing (CTF) regime in place as of a March 2019 site visit.

With respect to the FATF effectiveness ratings, the organization rated Turkey substantially effective regarding risk, policy and coordination and international cooperation. FATF rated Turkey moderately effective on seven of the effectiveness ratings: supervision; prevention measures; legal persons and arrangements; financial intelligence; money laundering investigation and prosecution; confiscation; and terror financing investigation and prosecution. Two of the effectiveness ratings, terrorist financing preventative measures and proliferation financing financial sanctions, received low effectiveness scores.

For the technical compliance ratings, the organization found Turkey to be compliant concerning the following 11 Recommendation topics: confiscation and provisional measures; financial institution secrecy laws; record keeping; reliance on third parties; reporting of suspicious transactions; tipping-off and confidentiality; financial intelligence units; responsibilities of law enforcement and investigative authorities; mutual legal assistance overall; freezing and confiscation within the context of mutual legal assistance; and extradition.

In addition, the following 17 Recommendation topics were rated largely compliant: assessing risk and applying the risk based approach; national coordination and cooperation; money laundering offense; terrorist financing offense; customer due diligence; correspondent banking; money or value transfer services; new technologies; wire transfers; higher risk countries; powers of supervision; powers of law enforcement and investigative authorities; cash couriers; statistics; guidance and feedback; international instruments; and other forms of international cooperation.

The 10 partially compliant Recommendation topics are as follows: targeted financial sanctions for terrorism and terrorist financing; nonprofit organizations; internal controls and foreign branches and subsidiaries; transparency and beneficial ownership of legal persons; transparency and beneficial ownership of legal arrangements; regulation and supervision of financial institutions; regulation and supervision of designated non-financial businesses or professions (DNFBP); customer due diligence for DNFBPs; other measures concerning DNFBPs; and sanctions.

FATF rated Turkey non-compliant on two Recommendation topics: the treatment of politically exposed persons and targeted financial sanctions concerning non-proliferation.

In addition to the ratings, the report notes Turkey’s recent AML/CTF efforts, in particular the finalization of an AML/CTF risk assessment in 2018, focus on AML/CTF investigations and Turkey’s adequate legal framework. It also highlights major AML/CTF threats facing Turkey from illegal drug trafficking, migrant smuggling, human trafficking and fuel smuggling.

To address any holes in its AML/CTF regime, as noted by the ratings, FATF recommends that Turkey undertake the following key actions: prioritizing the use of financial intelligence related to money laundering consistent with Turkey’s risks; developing a national strategy for confiscating the proceeds and instrumentalities of crime; fixing the gaps in its legal framework to fully meet its obligations concerning targeted financial sanctions related to terrorism; fixing deficiencies in a timely transposition of United Nations Security Council Resolution 1718 and other UN resolutions; implementing focused and proportionate measures to nonprofit organizations identified as at risk of terror financing abuse; increasing the number of parallel financial investigations in terrorism cases; and developing the supervisory approach of the authorities to DNFBP sectors, in particular, for the precious metals and stones and real estate sectors.