Money Laundering Techniques in Turkey Exposed: A Closer Look at Anti-Money Laundering Regulations
Introduction
Turkey has been a hotspot for money laundering activities due to its high susceptibility to narcotics trafficking. In response, the government has introduced several new laws to enhance its anti-money laundering (AML) framework.
Methods of Money Laundering in Turkey
Banks and non-bank financial entities are often used as conduits for money laundering in Turkey. The methods include:
- Cross-border cash smuggling
- Bank transfers into and out of the country
- Purchasing expensive goods like real estate, gold, and high-end cars
History of Anti-Money Laundering Regulations in Turkey
In 1996, Turkey made money laundering a crime with the Law on Preventing Money Laundering (No. 4208). The statute included a wide range of predicate offenses such as drug-related crimes, smuggling weapons and artifacts, terrorism, forging documents, and trafficking of people and human organs.
The government has also introduced new anti-money laundering regulations, criminal laws, and criminal procedural laws in 2004. Money laundering is widely defined under the new Criminal Law to encompass all predicate offenses carrying a one-year jail sentence.
Current Anti-Money Laundering Regulations in Turkey
Turkey’s anti-money laundering laws are influenced by international treaties and concepts. Money laundering has become a distinct crime in 1996, and the Ministry of Finance formed the Financial Crimes Investigation Board, which sets anti-money laundering and counterterrorism funding policies and gathers and analyzes data and information.
The Law on the Prevention of Laundering Proceeds of Crime No. 5549 (hereafter referred to as ‘Law No. 5549’) entered into force on October 18, 2006, although the aforementioned Law No. 4208 proved insufficient in the near term.
Law No. 5549 governs parties and their duties, while the Regulation on Measures for the Prevention of Laundering the Proceeds of Crime and Financing of Terrorism goes into additional detail. The following anti-money laundering guidelines are included in the cited legislation:
- Recognizing clients and the beneficial owner
- Revealing shady dealings,
- Providing continuous and/or on-demand information
- Document retention and submission by anti-money laundering regulations
- Setting up processes for internal audits, risk management, and control, and carrying out training initiatives
Penalties for Non-Compliance
Anyone who, without taking part in an offense, i) purchases, accepts, keeps, or ii) utilizes an asset while being aware of its worth and nature will face a sentence of two to five years in jail. If the offense is committed during an organization’s operations or b) is committed by a public official or professional who is on duty, the penalty is increased.
Conclusion
Turkey continues to reform anti-money laundering regulations, such as tightening its anti-money laundering mechanisms, expanding the list of those required to report suspicious transactions to authorities, and raising administrative fines for failure to impose anti-money laundering obligations, and so on, to uphold its commitments to both locally and internationally.