Turkiye has an ongoing issue with money laundering, mainly as a result of its high susceptibility to narcotics trafficking. Turkiye has introduced several new laws to enhance its anti-money laundering (AML) framework.

Both banks and non-bank financial entities are used for money laundering in Turkiye. Cross-border cash smuggling, bank transfers into and out of the nation, and purchasing expensive goods like real estate, gold, and high-end cars are all examples of money laundering techniques used in Turkiye.

Law on Preventing Money Laundering

With the Law on Preventing Money Laundering, Turkiye made money laundering a crime for the first time in 1996. (No. 4208). The statute included a wide range of predicate offenses, such as drug-related crimes, smuggling weapons and artifacts, terrorism, forging documents, and trafficking of people and human organs. A money-laundering violation is punishable by a term of two to five years in jail, a monetary penalty equal to double the amount of the money laundered, and provisions for asset forfeiture.

A set of regulations requiring the submission of Suspicious Transaction Reports (STRs), customer identification, and the preservation of transaction information for five years was subsequently adopted by the Council of Ministers. Banks and a wide range of non-bank financial organizations, such as insurance companies and jewelry stores, are subject to these restrictions.

The Government of Turkiye passed new anti-money laundering regulations, criminal laws, and criminal procedural laws in 2004. Money laundering is widely defined under the new Criminal Law, which went into effect in June 2005, to encompass all predicate offenses carrying a one-year jail sentence. The AML law in Turkiye used to include a list of particular predicate violations. In June 2005, a new Criminal Procedures Law also went into force.

The Prevention of Laundering the Proceeds of Crime (No. 5549), which was passed in October 2006, amended and enhanced the anti-money laundering legislative framework created under Law No. 4208. The Law on the Prevention of the Funding of Terrorism (No. 6415), passed by the Turkish government in February 2013, expanded the definition of terrorist financing offenses and gave authorities an additional legal authority to prosecute cases of alleged terrorist financing.

In recent years, AML regulations have been created to increase the provisions of these laws. Financial Crimes Investigation Board (MASAK), a service organization established under the Ministry of Finance, is the primary reporting body in Turkiye.

Current Anti-Money Laundering Regulations in Turkiye

International treaties and concepts have influenced Turkiye’s anti-money laundering laws, which have gotten more globalized. Money laundering has become a distinct crime in 1996, and the Ministry of Finance formed the Financial Crimes Investigation Board, which sets anti-money laundering and counterterrorism funding policies and gathers and analyzes data and information.

The Law on the Prevention of Laundering Proceeds of Crime No. 5549 (hereafter referred to as ‘Law No. 5549’) entered into force on October 18, 2006, although the aforementioned Law No. 4208 proved insufficient in the near term.

Law No. 5549 governs parties and their duties, while the Regulation on Measures for the Prevention of Laundering the Proceeds of Crime and Financing of Terrorism goes into additional detail.

The following anti-money laundering guidelines are included in the cited legislation:

• Recognizing clients and the beneficial owner
• Revealing shady dealings,
• Providing continuous and/or on-demand information
• Document retention and submission by anti-money laundering regulations
• Setting up processes for internal audits, risk management, and control, and carrying out training initiatives

The majority of significant players in the financial system are also designated as required parties. They are expected to hire compliance officers to run compliance programs to ensure that required firms abide by anti-money laundering laws and notify MASAK as needed. The Regulation on Compliance Programs Regarding Prevention of Laundering the Proceeds of Crime and Financing of Terrorism regulates the fundamentals of compliance policies and the selection of a compliance officer.

How is Money Laundering Punished?

Article 282 of Turkish Criminal Code No. 5237, titled “Laundering the Proceeds of Crime,” governs money laundering as a distinct offense.

Additionally, the text considers the following behaviors to be unlawful:

1. sending money earned through criminal activity overseas or
2. Using these funds in any way to either i) hide their illicit sources or (ii) create the appearance they were obtained lawfully.

These offenses are punishable by a court fine of up to 20,000 days and a term of jail ranging from three to seven years. If the offense is a) committed during an organization’s operations or b) is committed by a public official or professional who is on duty, the penalty is increased.

Anyone who, without taking part in an offense, i) purchases, accepts, keeps, or ii) utilizes an asset while being aware of its worth and nature will face a sentence of two to five years in jail.

What if the criminal is a legal entity rather than an actual person? Legal entities are not criminally culpable, therefore the personhood principle is central to criminal law. Article 282, which states that a legal entity engaged in such activity shall be subject to the security measures particular to legal entities, is noted as referencing the idea.

A legal entity’s involvement in money laundering, however, is extremely likely to result in the board of directors being held criminally liable given their duty to guarantee a corporation’s compliance with anti-money laundering laws and for the appointment of a compliance officer.

Conclusion

It is hard to treat money laundering as a local issue in light of the fast globalization of commerce and economy, and nations have a duty to one another.

Turkiye continues to reform anti-money laundering regulations, such as tightening its anti-money laundering mechanisms, expanding the list of those required to report suspicious transactions to authorities, and raising administrative fines for failure to impose anti-money laundering obligations, and so on, to uphold its commitments to both locally and internationally. MASAK is an authorized organization that conducts research, analyzes, and contributes to policymaking as well as the investigation of money laundering and terrorism funding, even though there is no other specialized regulative enforcement authority formed for anti-corruption.

Turkiye is anticipated to take a deliberate and proactive approach to combat money laundering given its unique geopolitical situation and its Judicial Reform Strategy for 2019–2023. To avoid any penalties or sanctions, businesses and investors in Turkiye must observe and comply with the laws that apply to them domestically and internationally and keep themselves informed at all times.