Financial Crime World

Turkey’s Risk Management Systems Under Scrutiny

As part of its efforts to combat money laundering and terrorist financing, Turkey has implemented a robust risk management system that is proportionate to the size of businesses and their volumes.

Regulation and Framework

The country’s regulatory framework, which includes the “Regulation On Measures Regarding Prevention Of Laundering Proceeds Of Crime And Financing Of Terrorism,” requires financial institutions to adopt a risk-based approach in monitoring transactions.

Suspicious Transactions

  • Under Turkish law, there is no requirement to obtain authority before proceeding with a current or ongoing transaction that is identified as suspicious.
  • However, the local legislation does allow for transactions to be monitored outside of jurisdictional boundaries, enabling financial institutions to stay one step ahead of criminals and prevent the laundering of illicit funds.

External Reporting

  • Turkey’s regulatory authorities require external auditors and other organizations to report on a bank’s anti-money laundering (AML) systems and controls annually.
  • The frequency may vary depending on the specific requirements of each institution.
  • Reports must include standardized content, such as sample testing of know-your-customer (KYC) files, suspicious activity reports (SARs), and risk assessments.

Data Protection

  • Turkey has implemented robust data protection laws to safeguard personal and corporate data.
  • The country’s Data Protection Authority is responsible for ensuring compliance with these regulations, which prohibit the unauthorized disclosure or transfer of sensitive information.

Correspondent Banking

  • The Turkish regulatory authority, MASAK, requires correspondent banks to establish effective AML systems and controls to prevent money laundering and terrorist financing.
  • This includes the implementation of automated suspicious transaction tools and regular monitoring of transactions.

Risk-Based Approach

  • Turkey’s risk-based approach to AML is enshrined in Article 19 of the “Regulation On Measures Regarding Prevention Of Laundering Proceeds Of Crime And Financing Of Terrorism.”
  • Financial institutions are required to establish appropriate risk management systems that take into account factors such as customer profession, commercial activities, and business history.

Independent Verification

  • When providing copies of identification documentation, Turkish law requires independent verification or authentication.
  • For example, submitted national identification cards, passports, driving licenses, and residency permits must be originals or copies stamped by a notary public.

Conclusion

Overall, Turkey’s risk management systems are designed to ensure that financial institutions operate in a secure and transparent environment. By implementing robust AML controls and data protection measures, the country is able to prevent money laundering and terrorist financing while also promoting economic growth and stability.