Turkey Introduces Beneficial Ownership Disclosure Requirements to Combat Money Laundering

Turkey has recently introduced a new regulation requiring companies operating in the country to disclose their beneficial owner information, aiming to combat money laundering and terrorist financing.

Global Standards and FATF Recommendations

The regulation aligns with global standards and the recommendations of the OECD’s Financial Action Task Force on Money Laundering (FATF), emphasizing the importance of transparency and accountability in financial transactions.

Beneficial Ownership Definition

According to General Communiqué No. 529 on Tax Procedure Law, beneficial ownership refers to “the natural person or the person who ultimately controls or has ultimate influence over a legal entity or unincorporated entities.” This definition is crucial in determining the actual individual or group of individuals controlling a company.

Disclosure Requirements

The regulation requires companies to provide information on:

• The person authorized to represent the company or partner
• Executives, trustees, or representatives of trusts and similar entities established abroad with headquarters in Turkey or executive powers residing in Turkey

Companies must notify any changes in beneficial ownership information within one month following the date of the change.

Reporting Obligations

In addition to companies, banks, factoring companies, insurance companies, sports clubs, and notaries are obligated to report beneficial owner information regarding transactions carried out by their customers upon request.

Implementation and Compliance

The first disclosures were made in August, and from now on, corporate taxpayers must make these disclosures as an annex to each provisional tax return and annual corporate tax return. It is essential for companies to carefully identify the person who will be included in the disclosure by conducting a detailed analysis of the communiqué’s explanations.

Seeking Specialist Advice

The implementation of this regulation raises several questions, which are expected to be addressed in time. In the meantime, it is crucial for companies to seek specialist advice on their specific circumstances to avoid potential liabilities and investigations in tax and other matters.

Key Points:

• Turkey has introduced a new regulation requiring beneficial ownership disclosure
• The regulation aims to combat money laundering and terrorist financing
• Companies must provide information on authorized representatives, executives, and trustees
• Banks, factoring companies, insurance companies, sports clubs, and notaries are obligated to report beneficial owner information upon request
• Companies must notify changes in beneficial ownership information within one month
• Seeking specialist advice is essential to avoid potential liabilities and investigations.