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KYC Procedure Explained in Turkey: A Compliance Guide

In an effort to combat financial crimes and bring Turkish regulations in line with international standards, the Turkish Financial Crimes Investigation Board (MASAK) has outlined a set of guidelines for compliance with Anti-Money Laundering and Combating Financing of Terrorism (AML/CTF) regulations. As the country’s top financial intelligence agency, MASAK plays a crucial role in preventing and exposing money laundering offenses.

Establishing an AML/CTF Program

To ensure compliance, designated parties such as financial institutions must establish an AML/CTF program that includes several key components:

• Onboarding principles
• Due diligence procedures for customers
• Suspicious transaction reporting procedures
• Documentation principles for keeping and submitting information
• The necessity of independent audits
• Notification to customs administration

Compliance Requirements

The law requires these entities to perform thorough due diligence on customers, disclose transactions suspected of involving money laundering or terrorism financing to MASAK, and maintain and provide pertinent records upon request. Failure to comply with these regulations can result in severe penalties.

Reporting Suspicious Transactions to MASAK

MASAK must be notified of any suspicious transaction, regardless of its value. The term “transaction” does not have to refer to a single transaction and can include multiple transactions evaluated together. A single Suspicious Transaction Report (STR) form must be filled out when reporting multiple suspicious transactions.

When to Report

Any information, suspicion, or reasonable ground to suspect that a transaction is suspicious is sufficient for reporting. The compliance officer appointed by the Board of Directors is responsible for reporting suspicious transactions to MASAK. Reports must be submitted within ten working days of the suspicion arising, or immediately in cases where any delay would be inconvenient.

Confidentiality

It is crucial not to disclose suspicious transaction information to anyone, including parties involved in the transaction, except for examiners assigned to supervision of obligations and courts during the judicial process. Failure to comply with this rule can result in imprisonment ranging from one to three years and a fine up to $5,000.

Avoiding Misleading Customers

When conducting transactions, MASAK should not be mentioned as a reference to avoid misleading customers, as it does not have the authority or function to approve or cancel transactions under applicable legislation.

Conclusion

By understanding these regulations and guidelines, Turkish financial institutions can ensure compliance with international standards and prevent financial crimes.