Turkey Steps Up Efforts to Combat Financial Crimes with Enhanced Customer Due Diligence Requirements

In its ongoing efforts to combat financial crimes, Turkey has introduced enhanced customer due diligence requirements for financial institutions operating in the country. These new regulations aim to ensure that Turkish companies comply with international anti-money laundering (AML) and combating the financing of terrorism (CTF) standards.

The Role of the Turkish Financial Crimes Investigation Board (MASAK)

At the heart of these efforts is the Turkish Financial Crimes Investigation Board (MASAK), a financial intelligence agency under the Ministry of Finance and Treasury. MASAK’s primary role is to:

• Analyze developments in the field of money laundering
• Formulate policies
• Conduct investigations and audits
• Report on its findings

Customer Due Diligence Requirements

To comply with AML/CTF regulations in Turkey, financial institutions must implement robust customer due diligence programs that include:

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

Designated Parties’ Responsibilities

The law requires designated parties, including financial companies, to perform due diligence on customers with whom they do business. This includes:

• Disclosing transactions suspected of involving money laundering or terrorism financing to MASAK
• Maintaining and providing pertinent information and records upon request

Reporting Suspicious Transactions

Reporting suspicious transactions to MASAK is a critical compliance requirement for Turkish financial institutions. Under the regulations, any suspicious transaction, regardless of its value, must be reported to MASAK. The term “transaction” can refer to multiple transactions, and when evaluating multiple suspicious transactions together, a single Suspicious Transaction Report (STR) form must be filled out.

Compliance Officer’s Responsibilities

The compliance officer appointed by the Board of Directors is responsible for reporting suspicious transactions to MASAK. Transactions must be reported within ten working days of the suspicion arising, or immediately in cases where any delay would be inconvenient. Those who break this rule face serious penalties, including imprisonment and fines.

Confidentiality and Data Protection

In addition, financial institutions must ensure that they do not disclose information about STRs to anyone, including the parties involved in the transaction. This is a critical aspect of maintaining confidentiality and protecting sensitive information.

Conclusion

As Turkey continues to strengthen its efforts to combat financial crimes, it is essential for financial institutions operating in the country to understand their customer due diligence obligations and implement robust compliance programs that meet international standards. By doing so, they can help prevent money laundering and terrorism financing while also protecting their reputation and avoiding significant penalties.

Key Takeaways

• Financial institutions operating in Turkey must comply with enhanced customer due diligence requirements
• Compliance requires robust customer due diligence programs and suspicious transaction reporting procedures
• Designated parties have a responsibility to perform due diligence on customers and report suspicious transactions to MASAK
• Failure to comply can result in serious penalties, including imprisonment and fines.