Risk Indicators
- FATF/EU Blacklist/Greylist (Lower Concern)
- Terrorism Financing (Medium Concern)
- US Dept of State INCSR
- Proliferation Financing
- Corruption
- Criminality
- Resilience & Governance
- Financial Transparency
- Offshore Finance Centres
- Sanctions
Background
Modern Turkey emerged in 1923 under Mustafa Kemal Ataturk, later moving from one-party rule toward a multiparty system marked by repeated periods of military intervention and political instability. Its international position has been shaped by membership in the UN and NATO, long-standing ties with Europe, and unresolved questions surrounding Cyprus and the Aegean. The 2017 constitutional referendum further transformed the state by replacing its parliamentary structure with a presidential system.
Turkey’s strategic environment remains defined by unsettled borders, the enduring PKK conflict, and instability in Syria and Iraq, alongside tensions involving Iran, Russia, the Caucasus, Greece, and Cyprus. Its role in regional energy and financial networks has attracted scrutiny over possible evasion of U.S., EU, and G7 sanctions, particularly through Russian oil and gas re-exports and transactions linked to Iran. At the same time, U.S. CAATSA measures tied to the acquisition of Russian S-400 systems continue to illustrate the delicate balance between Turkey’s NATO alignment, defense ambitions, and regional priorities.
AML & Terrorist Financing
Türkiye has made significant AML/CFT progress and, following FATF’s June 2024 assessment, is no longer subject to increased monitoring, with MASAK receiving additional resources and reporting more active supervision and enforcement. Nevertheless, its strategic location and exposure to drug trafficking, migrant smuggling, unregulated remitters, real estate, precious metals, online services, and emerging crypto risks continue to create complex laundering challenges. Terrorist-financing and proliferation-financing controls remain areas of particular interest, including the timeliness of targeted financial sanctions, the use of financial intelligence beyond major terrorism cases, and risk-based oversight of non-profit organisations.
Sanctions
Turkey is bound to implement UN sanctions, but no independent comprehensive sanctions regime imposed by Ankara on other nations is identified, beyond its support for a proposed UN arms embargo on Israel. Measures directed against Turkey have largely been targeted and linked to defense procurement, drilling activity, and military operations, including ongoing U.S. OFAC restrictions on the Presidency of Defense Industries and EU and UK frameworks concerning Eastern Mediterranean energy exploration. Several earlier restrictions—including U.S. Syria-related actions, Canadian drone controls, and European arms suspensions—were lifted, while the UK NCA and OFSI continue to flag Turkish trade, banking, and intermediary networks as potential channels for Russian and Iranian sanctions evasion.
Criminality
Türkiye has anti-corruption laws and oversight bodies, including the Presidential State Supervisory Council, Ombudsman Institution, and Public Officials Ethics Board, but enforcement is uneven and allegations persist that major public contracts favor firms linked to the AKP. Criminal activity spans human trafficking, smuggling, narcotics, counterfeit and excise goods, oil, cybercrime, and sophisticated financial fraud, with some markets reportedly involving state-embedded or politically connected actors.
Reports
Türkiye’s strategic position between Asia and Europe shapes significant challenges involving narcotics transit, human trafficking, terrorist travel, and illicit finance, alongside extensive enforcement activity by the Turkish National Police, Customs, Interior Ministry, and Turkish National Intelligence Organization. Recent developments include major cocaine and synthetic-drug seizures, vulnerabilities among refugees and agricultural workers, operations involving ISIS and PKK-linked networks, and continued efforts reflected in FATF’s removal of Türkiye from its gray list and its Tier 2 standing on trafficking.
Industry/Product Sector Risk
Turkey’s financial and commercial landscape presents a varied risk profile, with banking, real estate, currency exchange, money transfer services, oil and gas, transportation, and cash-intensive activity attracting particular attention. Authorities identify vulnerabilities ranging from informal and cross-border cash movements to digital payments, property transactions, legal-person structures, and sectors exposed to fuel smuggling, fraud, corruption, trafficking, and illegal betting. Findings involving FIU referrals, MERSIS-registered companies, FATF-defined non-profit organisations, and the uneven implementation of controls across designated professions point to a complex environment where sector-specific detail is essential.
Economy & Investment Climate
Türkiye’s economy combines a large, strategically positioned market and diversified industrial base with slower growth, severe inflation, currency pressure, and continuing exposure to current-account and reconstruction demands. The Central Bank of the Republic of Türkiye, the Medium-Term Program, and investment bodies such as the Presidency’s Investment Office are supporting stabilization and foreign investment, although regulatory uncertainty, judicial concerns, localization requirements, and geopolitical risks continue to shape the business environment.
Cryptocurrency Regulations
Turkey permits cryptocurrency trading within an increasingly formal framework, while the CBRT prohibits using crypto assets for payments and Law No. 7518 places service providers under Capital Markets Board (CMB/SPK) oversight. MASAK applies established AML obligations—including a TRY 15,000 Travel Rule threshold—while evolving requirements around licensing, taxation, token offerings, and future OECD CARF exchanges create a compliance landscape worth examining closely.
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