Turkey’s Financial Regulator Cracks Down on Customer Identification and Suspicious Transactions
In a move aimed at strengthening anti-money laundering (AML) and combating the financing of terrorism (CFT), Turkey’s financial regulator, MASAK, has announced stricter measures for financial institutions to obtain accurate identity information from customers and report suspicious transactions.
Enhanced Customer Identification Measures
Under the new regulations, financial institutions must complete customer identification before establishing a business relationship or finalizing a transaction. Failure to comply with this obligation may result in an administrative fine of 30,000 Turkish Lira (TRY).
- Financial institutions are required to obtain accurate identity information from customers
- Failure to comply may result in an administrative fine of TRY 30,000
Reporting Suspicious Transactions
MASAK has emphasized the importance of reporting suspicious transactions, regardless of the amount involved. Transactions deemed suspicious include those where there is any information, suspicion, or reasonable grounds to suspect that the asset was acquired through illegal means or used for illegal purposes, including terrorist activities.
- Financial institutions are required to report these transactions to MASAK
- Failure to do so may result in an administrative fine of TRY 50,000
Obligations on Public Institutions and Individuals
Public institutions, organizations, real and legal persons, and non-legal entities are obligated to provide all necessary information, documents, and records related to their activities upon request by MASAK or supervisors. Breach of this obligation may lead to a prison sentence of up to three years and a judicial fine of up to 5,000 days.
- Obligations include providing information, documents, and records related to activities
- Failure to comply may result in a prison sentence and judicial fine
Document Retention and Notification Requirements
Financial institutions must retain documents for eight years from the date of issuance and provide them to authorities if requested. Failure to comply with these obligations may result in a prison sentence of one to three years and a judicial fine of up to 5,000 days.
- Financial institutions are required to retain documents for eight years
- Failure to comply may result in a prison sentence and judicial fine
Electronic Notification Procedures
The regulations also outline electronic notification procedures, which require financial institutions to notify MASAK electronically and respond promptly to any requests for information. Breach of this obligation may result in an administrative fine of 40,000 TRY.
- Financial institutions must notify MASAK electronically
- Failure to comply may result in an administrative fine
Risk-Based AML and ATF Compliance Program Requirements
Only specific financial institutions are required to establish and operate a risk-based AML and ATF compliance program. These include banks, capital markets intermediary institutions, insurance companies, pension companies, and other specified entities.
- Financial institutions must establish and operate a risk-based AML and ATF compliance program
- Only specific institutions are required to comply
Conclusion
The Turkish government has made it clear that these regulations are essential for combating money laundering and terrorist financing. Financial institutions must comply with them to avoid severe penalties.
For further clarification on these regulations or any other legal matters, please do not hesitate to contact our law firm.