Turkey Steps Up Efforts to Combat Money Laundering with Strengthened Banking Regulations
Introduction
Turkey’s high susceptibility to narcotics trafficking and money laundering activities has prompted the country to introduce several new laws and regulations aimed at enhancing its anti-money laundering (AML) framework. In this article, we’ll explore Turkey’s efforts to combat money laundering and discuss the significant reforms made in recent years.
A Brief History of Turkey’s AML Efforts
The Law on Preventing Money Laundering (1996)
The first law on preventing money laundering was passed in 1996, making money laundering a criminal offense and introducing measures to prevent such activities. However, the law was deemed insufficient by international standards, prompting further reforms.
New Anti-Money Laundering Regulations (2004)
In 2004, Turkey passed new anti-money laundering regulations, criminal laws, and criminal procedural laws. The Criminal Law, which came into effect in June 2005, widened the definition of money laundering to include all predicate offenses carrying a one-year jail sentence.
Prevention of Laundering the Proceeds of Crime Law (2006)
The Prevention of Laundering the Proceeds of Crime law, enacted in October 2006, further strengthened Turkey’s anti-money laundering regime. The law requires financial institutions and non-bank financial organizations to:
- Submit Suspicious Transaction Reports (STRs)
- Identify customers
- Preserve transaction information for five years
Law on the Prevention of the Funding of Terrorism (2013)
In February 2013, Turkey passed the Law on the Prevention of the Funding of Terrorism, which expanded the definition of terrorist financing offenses and gave authorities additional legal powers to prosecute such cases.
Implementing and Enforcing AML Regulations
The Financial Crimes Investigation Board (MASAK) is responsible for implementing and enforcing Turkey’s anti-money laundering regulations. MASAK sets AML policies and gathers and analyzes data and information to combat money laundering and terrorism funding.
Penalties for Money Laundering
Under Turkish law, money laundering is punishable by:
- A term of two to five years in jail
- Fines equal to double the amount of the money laundered
- Legal entities can also face penalties if found guilty of money laundering
Compliance with International Standards
To comply with international standards, Turkey has designated most significant players in the financial system as required parties, which must:
- Hire compliance officers
- Implement anti-money laundering programs
The Regulation on Compliance Programs Regarding Prevention of Laundering the Proceeds of Crime and Financing of Terrorism outlines the requirements for these programs.
Conclusion
Turkey’s efforts to combat money laundering are crucial in a rapidly globalizing economy. The country has made significant strides in strengthening its AML regime, but further reforms are needed to ensure compliance with international standards.