Financial Crime World

Turkey Faces Shortcomings in Money Laundering Prevention: Report

A recent report by the Financial Action Task Force (FATF) has highlighted significant shortcomings in Turkey’s efforts to prevent money laundering and terrorist financing.

Progress Made, but More Work Needed

While Turkey has made progress in strengthening its legal framework, the country still needs to improve its implementation of anti-money laundering and counter-terrorist financing measures. Despite having completed a national risk assessment in 2018, Turkey faces a high risk of money laundering due to its geographic location.

Risks and Threats

  • Drug Trafficking: Drug trafficking poses a significant threat to Turkey’s financial system.
  • Migrant Smuggling: Migrant smuggling is another major concern for the country.
  • Human Trafficking: Human trafficking is also a serious issue in Turkey.
  • Fuel Smuggling: Fuel smuggling is a significant threat to the country’s economy.

Terrorist Financing Risks

Turkey faces significant terrorist financing risks from both national and international sources. The country needs to improve its implementation of measures to freeze assets linked to terrorism and the proliferation of weapons of mass destruction.

Recommendations

To address these shortcomings, Turkey needs to:

  • Improve Asset Freezing: Improve its ability to freeze assets linked to terrorism and the proliferation of weapons of mass destruction.
  • Develop a National Strategy: Develop a national strategy to permanently deprive criminals of their ill-gotten gains.
  • Enhance Financial Intelligence: Make better use of financial intelligence to detect and investigate money laundering cases.

Current Challenges

Turkey’s authorities cooperate well with foreign counterparts, but need to make better use of financial intelligence. The country also needs to:

  • Improve Asset Freeze Effectiveness: Improve its ability to freeze assets linked to terrorism and the proliferation of weapons of mass destruction.
  • Enhance Non-Financial Entity Understanding: Improve non-financial entities’ understanding of the risks they face, such as real estate agents and dealers in precious metals and stones.

Conclusion

Turkey has established a legal framework that can form the basis for achieving effective outcomes, but it needs to swiftly address the gaps identified in this report. The FATF adopted this report at its October 2019 Plenary meeting and called on Turkey to take swift action to improve its anti-money laundering and counter-terrorist financing measures.