FATF Status

Turkey is on the FATF List of Countries that have been identified as having strategic AML deficiencies

Latest FATF Statement  -  23 February 2024

In October 2021, Türkiye made high-level political commitment to work with the FATF to strengthen the effectiveness of its AML/CFT regime. At its February 2024 Plenary, the FATF made the initial determination that Türkiye has substantially completed its action plan and warrants an on-site assessment to verify the implementation of the AML/CFT reforms has begun and is being sustained, that the, and that the necessary political commitment remains in place to sustain implementation in the future.

Türkiye has made key reforms, including: (1) enhancing its approach to risk-based AML/CFT supervision; (2) taking steps to ensure sanctions for AML/CFT breaches and beneficial ownership requirements are dissuasive; (3) enhancing resources for its FIU and the use of financial intelligence produced; (4) undertaking more complex ML investigations and prosecutions in line with risks; (5) improving its asset recovery system; (6) prioritising TF investigations, prosecutions and confiscations related to UN-designated groups; (7) enhancing its implementation of targeted financial sanctions for terrorism financing; and (8) enhancing outreach to a broad range of NPOs and taking steps to ensure that supervision of NPOs is risk-based and does not disrupt or discourage legitimate NPO activity, such as fundraising.

Compliance with FATF Recommendations

The last follow-up Mutual Evaluation Report relating to the implementation of anti-money laundering and counter-terrorist financing standards in Turkey was undertaken in 2023. According to that Evaluation, Turkey was deemed Compliant for 14 and Largely Compliant for 25 of the FATF 40 Recommendations. It remains Highly Effective for 0 and Substantially Effective for 2 with regard to the 11 areas of Effectiveness of its AML/CFT Regime.

US Department of State Money Laundering assessment (INCSR)

Turkey is categorised by the US State Department as a Country/Jurisdiction of Primary Concern in respect of Money Laundering and Financial Crimes.

Overview

Turkey’s strategic location between Europe and Asia, its significant trade with both continents and with the United States, and its commercial relationships and geographical proximity to politically turbulent and undemocratic countries complicate Turkey’s efforts to combat illicit finance.   Conflicts close to Turkey’s southern border create further challenges as Turkey is a hub for unregulated money remitters, many of which serve the more than four million refugees in Turkey.

Turkey’s anti-money laundering/combating the financing of terrorism (AML/CFT) legislation largely is in line with international standards.  However, weak implementation continues to result in few effective money laundering prosecutions and forfeiture actions.  Most forfeiture actions are focused on suspected followers of U.S. resident Fethullah Gulen, known as the Gulen movement – a group the Government of Turkey has designated as a terrorist organization.  However, in 2021 Turkey used its new, streamlined procedures to quickly effect an asset freeze action in relation to U.S.-designated persons and entities.

Index                                                                          Rating (100-Good / 0-Bad)

Transparency International Corruption Index                            34

World Governance Indicator – Control of Corruption               35

Türkiye experienced strong economic growth between 2002 and 2007, and it weathered the global economic crisis of 2008-2009 better than most countries, establishing itself as a relatively stable emerging market with a promising trajectory of reforms and a strong banking system. However, over the last several years, economic and democratic reforms have stalled and, by some measures, regressed. In 2021, Türkiye’s GDP grew 11 percent year-over-year (YOY), the highest growth rate in ten years, but the Turkish lira also shed 44 percent of its value against the dollar and has lost over 80 percent of its value against the dollar in the last five years. In 2022, GDP grew by 5.6 percent, exceeding expectations, while inflation averaged 64.3 percent. In 2023, growth is expected to be around three percent, with significant downside risks. Continued unorthodox monetary policy, currency depreciation, inflation, high current account deficits, and over $100 billion in damage from the February 2023 earthquakes have left Türkiye vulnerable to external economic shocks.

Türkiye’s foreign direct investment (FDI) regime treats foreign investors identically to domestic investors and places few restrictions on acquisitions by foreign firms. However, opaque rulemaking and legislative processes added risks for all investors in 2022. Türkiye’s FDI equity capital inflows amounted to $6.48 billion 2022, compared to $7.1 billion in 2021. Türkiye’s investment incentives promote green and renewable investments and the development of strategic industries and developing regions of Türkiye. Geopolitical shocks, including Russia’s full-scale invasion of Ukraine, have spurred inflation primarily through increased energy prices in Türkiye but have not meaningfully degraded the country’s investment climate. Export controls and sanctions compliance risks related to assets with business interests in Iran, Belarus, and Russia continue to be a concern for investors. Türkiye’s investment climate is positively influenced by its large domestic market, favorable demographics, skilled workforce, and strategic location.

Country Links

Financial Crimes Investigation Board (MASAK )​

Central Bank of the Republic of Turkey