Turkish Authorities Step Up Efforts to Combat Money Laundering
Turkey has long struggled with money laundering, largely due to its susceptibility to narcotics trafficking. In response, the government has introduced a series of new laws to strengthen its anti-money laundering framework.
The Problem of Money Laundering in Turkey
The practice of money laundering in Turkey is widespread and often involves cross-border cash smuggling, bank transfers, and the purchase of luxury goods such as real estate, gold, and high-end vehicles.
History of Anti-Money Laundering Laws in Turkey
In 1996, Turkey enacted the Law on Preventing Money Laundering (No. 4208), which made money laundering a criminal offense for the first time. The statute included a range of predicate offenses, including:
- Drug-related crimes
- Weapons smuggling
- Terrorism
- Document forgery
- Human trafficking
The law also established requirements for financial institutions to:
- Submit Suspicious Transaction Reports (STRs)
- Identify customers
- Preserve transaction records for five years
Amendments and Enhancements to Anti-Money Laundering Laws
In 2004, the Turkish government passed new anti-money laundering regulations, criminal laws, and criminal procedural laws. The Criminal Law was amended in June 2005 to broaden the definition of money laundering to include all predicate offenses carrying a one-year jail sentence.
The Prevention of Laundering the Proceeds of Crime (No. 5549) law, enacted in October 2006, further strengthened Turkey’s anti-money laundering framework by:
- Expanding the definition of terrorist financing offenses
- Granting authorities additional legal powers to prosecute suspected cases of terrorism funding
Recent Efforts to Enhance Compliance with AML Requirements
In recent years, Turkish authorities have introduced new regulations aimed at enhancing compliance with AML requirements. The Financial Crimes Investigation Board (MASAK), a service organization under the Ministry of Finance, serves as the primary reporting body in Turkey.
Influence of International Treaties and Concepts on AML Framework
Turkey’s anti-money laundering laws have been influenced by international treaties and concepts, leading to increased globalization of its AML framework.
Penalties for Money Laundering
Under Turkish law, money laundering is punishable by:
- A term of imprisonment ranging from two to five years
- A fine equal to double the amount laundered
- Asset forfeiture
Required Parties in Turkey’s Financial System
The Turkish government has designated most significant players in the financial system as required parties, which are expected to employ compliance officers and establish internal audit systems to ensure adherence to AML regulations.
Conclusion
Turkey’s efforts to combat money laundering demonstrate its commitment to upholding international standards and addressing the country’s unique geopolitical challenges. Businesses and investors operating in Turkey must be aware of and comply with domestic and international AML regulations to avoid penalties or sanctions.