Financial Crime World

KYC Procedure Explained in Turkey: A Step-by-Step Guide to Compliance

Turkey’s financial services sector is subject to strict regulations aimed at preventing money laundering, terrorist financing, and other illegal activities. One key requirement is the Know Your Customer (KYC) process, which involves verifying the identity, suitability, and risk profile of customers.

Turkey’s Anti-Money Laundering (AML) Framework

The AML framework in Turkey is governed by several laws and regulations, including:

  • Turkish Criminal Law No. 5237
  • Law on Prevention of Laundering of Crime Revenues No. 5549
  • Banking Law No. 5411
  • Financial Crimes Investigation Board (MASAK)

KYC Identification Process

The KYC identification process typically involves face-to-face verification of a customer’s identity using:

  • ID card
  • Passport
  • Other accepted documents

In remote situations, obligated parties may use electronic channels to verify customer identities, provided the legislation governing their main field of activity permits it.

Customer Due Diligence

During the KYC process, customers are assessed based on their risk profile, including:

  • Purpose and nature of business
  • Source of assets and funds
  • Average income information
  • Estimated transaction volume
  • Number of transactions

Investment firms under the Capital Markets Law (CML) must verify customer identities before opening an account.

Oversight by Regulators

MASAK has the authority to request and access all relevant information from obligated parties, including:

  • Banks
  • Financial institutions
  • Investment firms

The public prosecutor’s office also plays a key role in investigating AML violations.

Outsourcing Customer Due Diligence

While it is not prohibited under Turkey’s AML Law to outsource customer due diligence, it may be regulated or restricted under sector-specific regulations. In the absence of specific regulation, there is no license requirement for third-party providers.

Entities That Can Be Relied Upon as Third Parties

In accordance with Turkish law, several entities can be relied upon as third parties to comply with AML regulations, including:

  • Credit institutions
  • Financial institutions
  • Auditors
  • External accountants
  • Tax advisors
  • Notaries
  • Independent legal professionals
  • Trust or company service providers
  • Estate agents
  • Providers of high-value goods
  • Insurance companies
  • Pension companies

Conclusion

Turkey’s KYC procedure is a crucial step in preventing money laundering and other illegal activities in the financial services sector. By understanding Turkey’s AML framework, regulations, and guidelines, obligated parties can ensure compliance with these requirements and maintain a strong reputation in the market.