Financial Crime World

BANKING COMPLIANCE PROCEDURES IN TURKEY: REGULATIONS AND GUIDELINES FOR REPRESENTATIVE OFFICES

The Turkish government has introduced new regulations to govern the activities of representative offices opened in Turkey by foreign banks. The regulations, published in the Official Gazette on April 1, 2008, aim to ensure that these offices comply with strict guidelines and procedures to maintain transparency and integrity.

Scope and Objective

Overview

The regulations apply to all representative offices opened in Turkey by foreign banks. The primary objective is to establish principles and procedures for the activities of these offices, including their scope of operations, personnel management, financial transactions, and document retention.

Key Provisions

Scope of Activities

  • Representative offices are only permitted to carry out:
    • Publicity
    • Strengthening relations with Turkish credit institutions
    • Conducting market research
    • Reporting data to their headquarters
  • They cannot engage in income-bearing or expenditure-bearing activities other than compulsory expenses and donations.

Informing the Agency

  • Offices must inform the Banking Regulation and Supervision Agency (BRSA) on a semi-annual basis about their activities, including negotiations with Turkish residents.
  • The agency shall also be informed about visitor lists and visit purposes of personnel working in the bank or financial institution.

Personnel Management

  • Personnel working in representative offices, including attorneys, must reside in Turkey.
  • Identity information, resumes, and residence details must be submitted to the BRSA within 15 working days of employment, and upon severance.

Financial Transactions

  • All operational costs of representative offices must be covered by the bank under which they operate.
  • A deposit or participation fund account shall be opened in a Turkish credit institution, and no money transfers can be made to the operating bank from this account.

Document Retention

  • Representative offices must keep documents related to deposit or participation fund accounts for at least 10 years.

Restrictions

Prohibited Activities

  • Representative offices cannot accept deposits or extend loans on behalf of the bank under which they operate or any other bank or financial institution.
  • Personnel of representative offices, including attorneys, cannot have access to information systems of the operating bank or any other bank or financial institution.

Enforcement and Entry into Force

The regulations will be enforced by the Chairman of the Banking Regulation and Supervision Agency. The provisions will enter into force on the date of publication in the Official Gazette.

Adjustment Period

Representative offices must adjust their conditions to comply with the new regulations within six months from the effective date.