Financial Crime World

Turkey’s Anti-Money Laundering Compliance Program: A Must for Institutions

Understanding the Importance of Monitoring and Controlling Activities to Avoid Administrative Fines and Reputational Damage

As part of its efforts to combat money laundering and terrorist financing, Turkey has implemented a robust anti-money laundering (AML) compliance program. This program requires institutions subject to the AML legislation to establish and implement risk-based compliance programs proportionate to the size and volume of their businesses.

Monitoring and Controlling Activities

According to Article 15 of the Compliance Regulation, the minimum scope of monitoring and controlling activities includes:

  • High-risk customers and their transactions
  • Transactions conducted with risky countries
  • Complex and unusual transactions

These activities are designed to identify and prevent suspicious transactions, ensuring that institutions comply with AML legislation.

Compliance Officer and Compliance Unit

Pursuant to Article 16 of the Compliance Regulation, obliged parties must assign a compliance officer who meets the criteria stipulated in the regulation. The board of directors is required to ensure the establishment of a compliance unit to execute the compliance program effectively.

Duties and Responsibilities of Compliance Officers

Compliance officers are responsible for:

  • Conducting necessary works to ensure that institutions comply with AML legislation
  • Communicating and coordinating with MASAK (Monetary Authority of Turkey)
  • Establishing corporate policies and procedures
  • Submitting risk management and monitoring and controlling policies for approval by the board of directors

Training Activities

Obliged parties must constitute a training policy that includes:

  • The operation of training activities
  • Responsible personnel
  • Employee and trainer training
  • Training methods

The purpose of implementing a training policy is to ensure compliance with AML legislation and raise employee awareness.

Internal Control

Institutions are required to:

  • Examine and control their corporate policies and procedures, risk management, monitoring and controlling activities, sufficiency and efficiency of training activities, and risk policy on an annual and risk-based approach
  • Report these activities to the board of directors through internal control units and supervisory boards

The Significance of Anti-Money Laundering Compliance Program

Compliance programs are implemented by compliance officers, but the ultimate responsibility for carrying out the program adequately lies with the board of directors. Non-compliance with obligations can result in administrative fines and reputational damage.

Conclusion

Institutions subject to AML legislation must establish and implement risk-based compliance programs proportionate to their size and volume of business. Failure to comply can lead to administrative fines and reputational damage. It is crucial for institutions to prioritize AML compliance to avoid these consequences and maintain a good reputation in the market.

Authors: Gönenç Gürkaynak, Esq., Damla Doğancalı, and Büşra Üstüntaş, ELIG Gürkaynak Attorneys-at-Law

(This article was first published by Mondaq on May 3, 2019.)