Turkey Grapples with Money Laundering Risks Despite Progress
Despite making significant strides in addressing money laundering and terrorist financing risks, Turkey still faces serious shortcomings, according to a recent Financial Action Task Force (FATF) report.
Assessment of Anti-Money Laundering and Counter-Terrorist Financing System
The FATF report assesses Turkey’s anti-money laundering and counter-terrorist financing system, highlighting areas where the country needs to improve. Despite its geographic location making it vulnerable to various forms of illicit activity, including drug trafficking and migrant smuggling, Turkey has strengthened relevant laws and regulations in recent years.
Key Challenges
- Implementation of measures: Authorities need to make better use of financial intelligence to increase the number of money laundering investigations, which currently result in few convictions.
- Development of national strategy: The country must develop a national strategy to permanently deprive criminals of their ill-gotten gains.
Investigating Terrorist Financing Cases
Turkey’s authorities focus primarily on identifying assets held by terror suspects, rather than examining the collection, movement, and use of funds or other assets. To address this, the country needs to fundamentally improve its ability to freeze, without delay, assets linked to terrorism, terrorist financing, and proliferation of weapons of mass destruction.
Key Recommendations
- Improved asset freezing: The country needs to swiftly develop a system that allows for the effective freezing of assets linked to terrorism and terrorist financing.
- Enhanced examination of funds: Authorities must examine the collection, movement, and use of funds or other assets in terrorist financing cases.
Banking Sector and Non-Financial Entities
The banking sector has a good understanding of its potential exposure to transactions with links to crime, but less awareness of its exposure to terrorist financing. Non-financial entities, such as real estate agents and dealers in precious metals and stones, have limited knowledge of the risks they face. Supervision of the financial and other relevant sectors is generally well-developed, but sanctions for non-compliance are not always effective.
Key Recommendations
- Improved awareness: The banking sector and non-financial entities need to increase their awareness of terrorist financing risks.
- Enhanced supervision: Authorities must ensure that supervision of the financial and other relevant sectors is effective in preventing non-compliance.