Turkey Strengthens Anti-Money Laundering Measures for Politically Exposed Persons
In an effort to further combat money laundering and terrorist financing, Turkey has introduced new regulations to enhance its anti-money laundering measures for politically exposed persons (PEPs).
Definition of PEPs
According to the Financial Action Task Force (FATF) definition, PEPs include:
- Senior natural persons entrusted with prominent public functions domestically or in a foreign country by election or appointment
- Members of the executive board and senior management of international organizations
New Regulations for Financial Institutions
In addition to performing customer due diligence (CDD) measures under Regulation 10, financial institutions (FIs) in Turkey are now required to take specific steps when dealing with foreign PEPs, including:
- Including risk management systems to determine whether a customer or beneficial owner is a foreign PEP
- Obtaining senior management approval before establishing or continuing business relationships with foreign PEPs
- Taking reasonable measures to establish the source of assets and funds belonging to customers and beneficial owners identified as PEPs
- Conducting enhanced ongoing monitoring on these relationships
Additional Measures for High-Risk Individuals
FIs in Turkey must also take enhanced measures when dealing with:
- Spouses, first-degree relatives, or close associates of foreign PEPs
- Close associates are defined as individuals with social, cultural, or economic relationships to the PEP, such as being a relative other than by first degree, a fiancé, a company partner, or employee
Payment and Insurance Requirements
FIs must take reasonable measures before or at the time of payment of insurance policy-related rights and claims to determine whether the beneficiaries or beneficial owners are PEPs. If a high risk is identified:
- Senior management must be informed
- Enhanced scrutiny must be applied
Reporting Suspicious Activity
The Turkish government has also emphasized the importance of reporting suspicious activity and informing the Financial Crimes Investigation Board (MASAK) when higher risks are identified.
Compliance with International Standards
The new regulations aim to strengthen Turkey’s anti-money laundering measures and comply with international standards. The country’s Third Enhanced Follow-Up Report notes that the absence of specific requirements for PEPs has been addressed through MASAK Communique No. 21 on PEP, which introduced specific references to foreign, domestic, and international organization PEPs, their family members, and close associates.
Conclusion
Overall, these measures demonstrate Turkey’s commitment to combating money laundering and terrorist financing and maintaining a robust financial system.