Financial Crime World

Liquidity Concerns Prompt Call for Conservative Banking Policies

Istanbul, Turkey - A Growing Concern

Amid growing concerns over capital adequacy and liquidity risks in the Turkish banking sector, regulators are urging banks to adopt more conservative policies to ensure financial stability.

Regulation on Corporate Governance

Under this regulation, bank directors and senior managers are required to ensure that remuneration policies align with ethical values, strategic objectives, and internal balances of the bank. Additionally, Turkish banks must establish a remuneration committee to oversee compensation practices.

Key Requirements:

  • Remuneration policies must align with ethical values, strategic objectives, and internal balances
  • Banks must establish a remuneration committee to oversee compensation practices

AML/CT Measures Crucial for Financial Stability

Turkey has implemented robust anti-money laundering (AML) and countering the financing of terrorism (CFT) regulations to shield its financial framework from illegal money flows and combat terrorist funding.

Key Requirements:

  • Banks and designated non-financial businesses and professions (DNFBPs) must identify and report suspect transactions
  • Maintain effective internal controls
  • Ensure compliance with AML/CFT requirements through inspections and audits

Depositor Protection Scheme Ensures Safety of Bank Deposits

The Banking Regulation and Supervision Agency (BRSA) oversees the depositor protection framework, which safeguards a wide range of depositors and their deposits.

Key Features:

  • Each depositor is protected up to TRY400,000 by deposit insurance at each bank
  • Joint accounts covered individually
  • Scheme funded from various sources, including contributions from banks, recovery efforts from failed banks, investments, and loans

Bank Secrecy Requirements Emphasized

The BRSA has established a comprehensive Regulation on Sharing of Secret Information to ensure confidentiality in bank-client relationships.

Key Requirements:

  • Banks must maintain secrecy over customer information
  • Penalties imposed for violations

Conclusion

As Turkey’s financial authorities continue to navigate the complexities of the banking sector, regulators are urging caution and prudence to mitigate risks and ensure financial stability. By adopting more conservative policies, banks can better withstand potential shocks and protect depositors’ interests.