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Turkey’s Know Your Customer Regulations: A Comprehensive Guide

In today’s fast-paced financial landscape, knowing your customer (KYC) regulations are more crucial than ever. In Turkey, anti-money laundering (AML) and counter-terrorism financing (CTF) laws require businesses to verify the identity of their clients and assess the risks involved in maintaining a business relationship.

National Regulatory Framework

Turkey’s AML and CTF regulations are governed by several laws and regulations, including:

  • Turkish Criminal Law No. 5237
  • Law on the Prevention of Laundering of Crime Revenues No. 5549
  • Banking Law No. 5411

The Financial Crimes Investigation Board (MASAK) is responsible for enforcing these regulations.

KYC Requirements

In Turkey, KYC requirements are designed to prevent money laundering and terrorist financing. Obliged parties, such as banks and financial institutions, must:

  • Detect and report suspicious transactions to MASAK
  • Notify the board when a transaction exceeds certain amounts prescribed by law

Customer Due Diligence

The know your customer process in Turkey involves verifying the identity of customers through:

  • Face-to-face verification
  • Remote identification methods (if permitted by legislation)

Remote identification can be used if it is designed to include all necessary information and contains minimal risk.

Risk Assessment

A risk assessment is conducted to create and evaluate a customer profile, including:

  • Information about the customer’s purpose and nature of business
  • Source of assets
  • Average income
  • Estimated transaction volume
  • Number of transactions

Outsourcing Customer Due Diligence

Turkey allows outsourcing of customer due diligence by contract to third parties who are not obliged by law to meet AML regulations. However, this may be regulated or restricted under sector-specific regulations.

Entities Relied Upon for AML Regulations

The following entities can be relied upon specifically by law as a third party to comply with AML regulations:

  • Credit institutions
  • Financial institutions
  • Auditors
  • External accountants
  • Tax advisors
  • Notaries
  • Independent legal professionals
  • Trust or company service providers
  • Estate agents
  • Insurance companies
  • Others

Conclusion

Turkey’s know your customer regulations are designed to prevent money laundering and terrorist financing. Businesses operating in Turkey must comply with these regulations by verifying the identity of their clients and assessing the risks involved in maintaining a business relationship.