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Turkey’s Money Laundering Prevention Best Practices: A Guide for Compliance

In Turkey, preventing money laundering is a critical aspect of financial regulation, aiming to prevent institutions from being used for illegal activities such as terrorism financing.

The Main Domestic Legislation

The main domestic legislation governing anti-money laundering (AML) in Turkey is Law No. 5549, which sets out a risk-based approach to AML program implementation.

Compliance Requirements

To comply with Turkish regulations, organizations must establish a comprehensive AML program that includes six essential components:

  • Corporate policies and procedures
  • Risk management systems
  • Training programs
  • Internal auditing
  • Compliance officer responsibilities
  • Penalties for non-compliance

Establishing an Effective AML Program

Corporate Policies and Procedures

Companies must develop and implement effective corporate policies and procedures that outline their AML program. These policies should be designed to prevent money laundering and terrorist financing, including measures such as:

  • Customer due diligence
  • Transaction monitoring
  • Reporting suspicious transactions

Risk Management System

Organizations must establish a risk management system that identifies and assesses the risks associated with money laundering and terrorist financing, including:

  • Identifying high-risk customers, transactions, and geographic regions
  • Implementing controls to mitigate these risks

Employee Training

Companies must provide training to employees on AML policies and procedures, as well as on the prevention of money laundering and terrorist financing. This training should be conducted by a compliance officer and cover topics such as:

  • The stages of money laundering
  • Relevant legislation
  • The importance of reporting suspicious transactions

Internal Auditing

Organizations must conduct internal audits to ensure that their AML program is effective and efficient, including:

  • Risk-based auditing
  • Assessing the effectiveness of controls, procedures, and policies in preventing money laundering and terrorist financing

Compliance Officer Responsibilities

Companies must appoint a compliance officer who is responsible for developing and implementing the AML program. This officer should have the authority to:

  • Research and evaluate suspicious transactions
  • Report these transactions to the relevant authorities

Penalties for Non-Compliance

Organizations that fail to comply with Turkish AML regulations may face significant penalties, including:

  • Administrative fines of up to TRY 4 million per year
  • Legal persons involved in money laundering can be held liable for fines of up to TRY 50 million

Conclusion

Companies operating in Turkey must take a proactive approach to preventing money laundering and terrorist financing by establishing effective AML programs that include corporate policies and procedures, risk management systems, training programs, internal auditing, compliance officer responsibilities, and penalties for non-compliance. By doing so, they can avoid significant financial penalties and reputational damage.