Financial Crime World

Turkish Anti-Money Laundering Compliance Program: A Must for Financial Institutions

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As the financial sector continues to evolve, regulatory bodies have intensified their efforts to prevent money laundering and terrorist financing. In Turkey, the Compliance Regulation has set forth specific requirements for financial institutions to establish and implement anti-money laundering (AML) compliance programs.

Monitoring and Controlling Activities

According to Article 15 of the Compliance Regulation, monitoring and controlling activities are essential for detecting and preventing suspicious transactions. Financial institutions must focus on:

  • High-risk customers and transactions
  • Dealings with risky countries
  • Complex or unusual transactions

Compliance Officer and Unit

As per Article 16 of the Compliance Regulation, financial institutions are required to appoint a compliance officer who meets specific criteria set forth by MASAK, Turkey’s financial regulator. The board of directors must also establish a compliance unit to execute the AML program.

Duties and Responsibilities of Compliance Officers

Compliance officers’ duties include:

  • Ensuring compliance with AML legislation
  • Communicating with MASAK
  • Establishing corporate policies and procedures
  • Conducting risk management and monitoring activities
  • Reporting suspicious transactions
  • Training employees on AML matters

Training Activities

Financial institutions must establish a training policy to ensure employees are aware of their obligations under AML legislation. The training program should cover topics such as:

  • Stages and methods of money laundering
  • Risk areas
  • Corporate policies and procedures

Internal Control

Annual internal control activities are necessary to examine and control corporate policies and procedures, risk management, monitoring and controlling activities, and training programs.

Significance of Anti-Money Laundering Compliance Program

While compliance officers implement the AML program, the ultimate responsibility lies with the board of directors. Failure to comply with obligations may result in:

  • Administrative fines
  • Reputational damage
  • Criminal charges

It is crucial for financial institutions to establish and maintain an effective AML compliance program.

Conclusion

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In conclusion, Turkish financial institutions subject to AML legislation are required to establish and implement risk-based compliance programs proportionate to their size and volume of business. Non-compliance may result in administrative fines and reputational damage. It is essential for financial institutions to prioritize AML compliance to avoid such consequences.

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

Source: Mondaq, May 3, 2019