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Turkey’s Money Laundering Prevention Methods Under Scrutiny: FATF Report Reveals Areas for Improvement

The Financial Action Task Force (FATF) has released its Turkey Follow-Up Report 2023, assessing the country’s efforts to prevent money laundering and combating the financing of terrorism (AML/CFT). While Turkey has made significant progress in some areas, the report highlights several areas that need improvement.

Strengthening Laws and Sanctions Regime

The report identifies several key areas where Turkey needs to strengthen its laws and regulations. These include:

  • Confiscation and provisional measures: Turkey’s laws related to confiscation and provisional measures need to be strengthened.
  • Financial sanctions regime: The country’s financial sanctions regime requires improvement.

Customer Due Diligence Practices

The report also finds that Turkey’s customer due diligence practices are lacking, with a need for more robust record-keeping and internal controls. This includes:

  • Improving record-keeping and internal controls
  • Enhancing customer due diligence practices

Transparency in Beneficial Ownership and Supervision

Turkey was criticized for its reliance on third parties and lack of transparency in beneficial ownership of legal persons and arrangements. The report also suggests that the country’s powers of supervisors and law enforcement authorities require strengthening.

Compliance with FATF Recommendations

On a positive note, Turkey was found to be largely compliant with several recommendations, including those related to:

  • Money laundering offenses
  • Terrorist financing
  • Financial intelligence units

Roadmap for Improvement

The FATF report provides a roadmap for Turkey to improve its AML/CFT regime. The country’s authorities must take concrete steps to address these deficiencies in order to maintain its international reputation as a stable and secure financial hub.

Timeline for Implementation

Turkey has two years to implement the necessary reforms and improvements, after which it will be re-assessed by the FATF. Failure to comply with the recommendations could result in the country being placed on a watchlist or even subject to more severe sanctions.