Financial Crime World

Turkish Banks Under Scrutiny: Liquidity Concerns and AML/KYC Measures Take Center Stage

Istanbul, Turkey - The Banking Sector in the Spotlight

As the Turkish economy continues to navigate uncertain times, regulators are keeping a close eye on the country’s banking sector. The Bank Regulation and Supervision Agency (BRSA) has issued new guidelines emphasizing the importance of liquidity, anti-money laundering (AML), combating the financing of terrorism (CFT), and depositor protection.

Liquidity Concerns: A Conservative Approach

In light of potential threats to capital adequacy, Turkish banks are being advised to adopt a more conservative approach. According to the Regulation on Corporate Governance:

  • Bank directors and senior managers must ensure that remuneration policies align with ethical values, strategic objectives, and internal balances of the bank.
  • Turkish banks are required to establish a remuneration committee.

AML/KYC Measures: A Global Concern

Turkey has implemented strict AML/CFT regulations as part of its Financial Action Task Force (FATF) membership. The country’s anti-money laundering law (Law No 5549 on the Prevention of Laundering Proceeds of Crime in Turkey) defines roles and tasks for key players, including:

  • Banks
  • Designated non-financial organisations
  • Government agencies

Financial institutions play a crucial role in detecting and preventing money laundering and terrorist financing. Compliance requires banks to have:

  • A designated officer responsible for managing AML/CFT processes, including risk evaluations and personnel training.
  • Internal checks to assess the effectiveness of their procedures.

Depositor Protection: A Safeguard for Investors

The BRSA oversees Turkey’s depositor protection framework under Banking Law. The agency ensures the stability and integrity of the banking system and protects depositors’ rights, safeguarding up to TRY400,000 per depositor at each bank. The Depositor Protection Scheme is funded through:

  • Contributions from banks
  • Recovery efforts from failed banks
  • Investments
  • Loans

Bank Secrecy: A Critical Component of Financial Stability

The BRSA has established a Regulation on Sharing of Secret Information to ensure the confidentiality of banking information. Bank secrecy is essential for maintaining trust in the financial system and preventing unauthorized access to sensitive data.

As Turkey’s banking sector navigates these complex regulatory requirements, it is clear that liquidity concerns, AML/CFT measures, depositor protection, and bank secrecy are critical components of ensuring financial stability and investor confidence.