Turkey’s Banks Required to Establish Remuneration Committee

In a move aimed at enhancing transparency and accountability in the financial sector, Turkey’s banks are now required to establish a remuneration committee. This new regulation is part of Turkey’s efforts to align its financial regulatory framework with international best practices and ensure that banks are better equipped to manage risk and maintain stability in the face of global economic uncertainty.

Background

The Turkish Banking Regulation and Supervision Agency (BRSA) has issued new regulations requiring all commercial banks operating in the country to set up a remuneration committee by June 30, 2023. The committee will be responsible for reviewing and approving the compensation packages of senior executives and other key personnel.

Key Requirements

All commercial banks operating in Turkey must establish a remuneration committee by June 30, 2023.
The committee will review and approve the compensation packages of senior executives and other key personnel.
Banks are required to submit a report to the BRSA by June 30, 2023, detailing their remuneration committee’s composition and functions.

Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT)

Turkey has strengthened its AML/CFT measures by implementing a range of regulations aimed at preventing illicit financial flows and combating terrorist funding. The new regulations require banks to:

Have a designated officer in charge of managing AML/CFT processes, including risk evaluations and personnel training.
Develop internal checks to determine how effective their AML/CFT procedures are.

Deposit Protection Regime

Turkey’s deposit protection regime has been enhanced to safeguard depositors’ rights. The scheme is funded from various sources, including contributions from banks, and provides coverage of up to TRY400,000 per depositor in the event of bank failure.

The BRSA has established a comprehensive regulation aimed at protecting customer data and preventing unauthorized disclosure of confidential information.

Industry Response

“These new regulations demonstrate Turkey’s commitment to ensuring the stability and integrity of its financial system,” said [Name], CEO of [Bank]. “We are fully supportive of these measures and will work closely with regulatory authorities to ensure compliance.”

Conclusion

The new regulations come into effect on January 1, 2023, and mark an important step towards achieving Turkey’s goals of strengthening governance practices and enhancing risk management in the banking sector. The move is expected to maintain confidence in the financial system and enhance transparency and accountability among banks operating in Turkey.