Turkey Enforces Stricter Know Your Customer Regulations
Strengthening Anti-Money Laundering Framework
Turkey has taken a significant step in its efforts to combat money laundering and terrorist financing by strengthening its regulatory framework for financial institutions. The country’s anti-money laundering (AML) regulations have been revised to require financial institutions to implement robust customer due diligence measures, including know your customer (KYC) procedures.
AML Compliance Program Requirements
According to the Financial Crimes Investigation Board (MASAK), all financial institutions, including banks, fintech companies, and insurance providers, are required to establish a risk-based AML compliance program. This includes:
- Developing corporate policies and procedures
- Performing risk management
- Monitoring and controlling transactions
- Designating a compliance officer
- Providing training to employees
Scope of AML Compliance Program
The scope of the AML compliance program covers all activities related to customer onboarding, transaction monitoring, and reporting suspicious activity. Financial institutions must also establish internal control mechanisms to ensure that their AML programs are effective in preventing money laundering and terrorist financing.
Customer Due Diligence Requirements
Under the new regulations, financial institutions are required to identify and verify the identity of customers, including individuals and businesses, before opening an account or providing services. This includes:
- Obtaining information on the customer’s source of wealth
- Purpose of the transaction
- Beneficial ownership
Reporting Suspicious Transactions
Financial institutions must also report suspicious transactions to MASAK, which is responsible for monitoring and investigating AML violations. Failure to comply with the regulations can result in administrative sanctions, including fines and penalties.
Turkey’s Commitment to Combating Money Laundering and Terrorist Financing
The new regulations are part of Turkey’s efforts to improve its compliance with international standards on AML and combat money laundering and terrorist financing. The country has also implemented stricter requirements for customer due diligence, including the requirement for financial institutions to obtain information on the beneficial ownership of customers.
Conclusion
Turkey’s new AML regulations demonstrate the country’s commitment to combating money laundering and terrorist financing. Financial institutions must ensure that they comply with these regulations to avoid fines and reputational damage. By implementing robust KYC procedures and AML compliance programs, financial institutions can play a crucial role in preventing these illegal activities and maintaining the integrity of the global financial system.