Title: Turkey’s Financial Regulatory Compliance: A Closer Look at Tackling Money Laundering and Terrorism Financing

Subtitle: Insights into the Ministries and National Authorities Involved in FATF’s Turkey Initiative

Ankara, Turkey – In the wake of growing concerns over money laundering, terrorist financing, and the financing of weapons of mass destruction, Turkey’s commitment to financial regulatory compliance has taken center stage. The international anti-money laundering and counter-terrorist financing organization, Financial Action Task Force (FATF), has evaluated Turkey’s implementation of recommendations to address these illicit activities. In this article, we shed light on Turkey’s efforts and the Ministries and national authorities involved in FATF’s on-going work.

Turkey’s Dedication to Financial Regulatory Compliance

During FATF’s evaluation in February 2023, Turkey received praise for significant strides made over the last five years. However, concerns remain regarding the inadequate implementation of some measures related to monitoring high-risk customers and transactions.

To strengthen its regulatory framework, Turkey has:

• Established the Financial Crimes Investigation Board (MASAK) to prevent and combat money laundering, terrorism financing, and other financial crimes.
• Assigned additional responsibilities to the Banking Regulation and Supervision Agency (BRSA) in the oversight of Turkey’s financial sector.
• Enhanced cooperation with international partners, such as the European Central Bank and the European Commission’s Directorate-General for Financial Stability, Financial Services, and Capital Markets Union.

Key Initiatives by the Banking Regulation and Supervision Agency

The Banking Regulation and Supervision Agency leads Turkey’s ongoing efforts to ensure banking sector compliance with global norms. Initiatives include:

• Risk-Based Supervision (RBS) methodology to identify, assess, and manage risks effectively.
• Enhanced cooperation with international organizations.

Legislative Reforms to Improve Financial Regulations

Recent legislative changes include revisions to the Turkish Anti-Money Laundering Law (AML Law) to update and improve regulations for financial institutions and other designated non-financial businesses and professions (DNFBPs).

Focus on Effectiveness of Regulatory Enforcement and Supervision

Although legislative changes have been introduced, concerns remain about the effectiveness of regulatory enforcement and supervision. Continuous monitoring and evaluation by the FATF, in collaboration with local and international regulatory bodies, is essential to maintain a robust and adaptable regulatory landscape.

Ministries at the Forefront of Turkey’s FATF Compliance Initiatives

Four Ministries are leading Turkey’s FATF compliance initiatives:

1. Ministry of Treasury and Finance
2. Ministry of Interior
3. Ministry of Foreign Affairs
4. Ministry of Justice

These Ministries work together to enhance communication, coordination, and the implementation of best practices in their respective areas of expertise. By doing so, they aim to strengthen Turkey’s financial regulatory framework and meet FATF requirements, thereby safeguarding the Turkish economy.