Know Your Customer Rules in Turkey: A Guide to Compliance
As part of its efforts to combat money laundering and terrorist financing, Turkey has implemented a range of anti-money laundering (AML) and counter-terrorist financing (CTF) regulations. These rules require financial institutions and other designated parties to “know their customer,” performing due diligence on customers with whom they do business.
The Role of the Turkish Financial Crimes Investigation Board (MASAK)
MASAK, a financial intelligence agency under the Ministry of Finance and Treasury, plays a key role in enforcing these regulations. MASAK’s primary responsibility is to analyze developments in money laundering and develop strategies for preventing and exposing such offenses.
Compliance Requirements
To comply with AML/CTF regulations in Turkey, institutions must implement a comprehensive compliance program that includes the following key components:
- Onboarding Principles: Institutions must have clear guidelines for onboarding new customers.
- Due Diligence Procedures for Customers: Institutions must perform thorough due diligence on customers, including verifying their identity and assessing their risk profile.
- Suspicious Transaction Reporting Procedures: Institutions must report any suspicious transactions to MASAK within 10 working days of suspicion arising or immediately in cases where any delay would be inconvenient.
- Documentation Principles for Keeping and Submitting Information: Institutions must maintain accurate records of customer information and transaction data, and submit this information to MASAK as required.
- Independent Audits: Institutions must conduct regular independent audits to ensure compliance with AML/CTF regulations.
Reporting Suspicious Transactions
Institutions are required to report any suspicious transactions, regardless of their value, to MASAK. A “transaction” is defined as multiple transactions that can be evaluated together. Institutions must submit a single Suspicious Transaction Report (STR) form for each evaluation.
Consequences of Non-Compliance
Institutions that fail to comply with these regulations may face severe penalties, including imprisonment ranging from one to three years and a fine of up to $5,000.
Maintaining Confidentiality
In addition to reporting suspicious transactions, institutions must maintain confidentiality regarding such reports and relevant internal reports. Breaching this confidentiality can result in serious consequences, including imprisonment and fines.
Conclusion
By understanding the Know Your Customer rules in Turkey, financial institutions can ensure compliance with international standards and reduce the risk of non-compliance penalties. It is essential for institutions to implement a comprehensive compliance program that includes all the necessary components and maintain accurate records to demonstrate compliance.