Turkey Fails to Effectively Combat Money Laundering and Terrorist Financing, Says Global Watchdog

The Financial Action Task Force (FATF), a global anti-money laundering watchdog, has deemed Turkey’s efforts to combat money laundering and terrorist financing as insufficient. Despite acknowledging the significant risks it faces from these financial crimes, Turkey still has several shortcomings that need to be addressed.

Shortcomings in Combatting Money Laundering

The FATF report, released in October 2019, highlighted several areas of concern:

• Inadequate asset freezing measures: Turkey’s lack of effective measures for freezing assets linked to terrorism and the proliferation of weapons of mass destruction poses a significant risk.
• Insufficient use of financial intelligence: Turkish authorities have not made better use of financial intelligence to investigate money laundering cases, resulting in few convictions.
• Lack of coordination and cooperation: Authorities need to improve their coordination and cooperation to address the risks posed by designated terrorists or terrorist organizations.

National Risk Assessment

Turkey’s national risk assessment from 2018 identified several significant money laundering risks, including:

• Drug trafficking • Migrant smuggling • Human trafficking • Fuel smuggling

Investigation of Terrorist Financing Cases

The report also criticized Turkey’s approach to investigating terrorist financing cases, which focuses primarily on identifying assets held by terror suspects rather than tracing the collection, movement, and use of funds or other assets. The country’s ability to freeze assets linked to terrorism is also deemed inadequate.

Positive Developments

On a positive note, Turkish authorities have demonstrated good cooperation with foreign counterparts in sharing information and responding to requests. However, there are still areas for improvement:

• Banking sector understanding: The banking sector’s understanding of its exposure to transactions linked to crime and terrorist financing varies. • Non-financial entities: Non-financial entities such as real estate agents and precious metal dealers have a less comprehensive understanding of the risks they face.

Call to Action

The FATF has called on Turkey to address the gaps identified in the report and improve its anti-money laundering and counter-terrorist financing regime. The country’s failure to effectively combat money laundering and terrorist financing poses significant threats to its financial stability and international reputation.