FATF Status

Turkey is no longer on the FATF List of Countries that have been identified as having strategic AML deficiencies

Latest FATF Statement - 28 June 2024

The FATF welcomes Türkiye’s significant progress in improving its AML/CFT regime. Türkiye strengthened the effectiveness of its AML/CFT regime to meet the commitments in its action plan regarding the strategic deficiencies that the FATF identified in October 2021 including by (1) dedicating more resources at the FIU to supervision of AML/CFT compliance by high-risk sectors and increasing on-site inspections overall; (2) applying dissuasive sanctions for AML/CFT breaches, in particular for unregistered money transfer services and exchange offices and in relation to the requirements of adequate, accurate, and up-to-date beneficial ownership information; (3) enhancing the use of financial intelligence to support ML investigations and increasing proactive disseminations by the FIU; (4) undertaking more complex money laundering investigations and prosecutions; (5) setting out clear responsibilities and measurable performance objectives and metrics for the authorities responsible for recovering criminal assets and pursuing terrorism financing cases and using statistics to update risk assessments and inform policy; (6) conducting more financial investigations in terrorism cases, prioritising TF investigations and prosecutions related to UN-designated groups and ensuring TF investigations are extended to identify financing and support networks; (7) concerning targeted financial sanctions under UNSCRs 1373 and 1267, pursuing outgoing requests and domestic designations related to UN-designated groups, in line with Turkey’s risk profile; (8) implementing a risk-based approach to oversight of non-profit organisations to prevent their abuse for terrorist financing, conducting outreach to a broad range of NPOs in the sector and engaging with their feedback, ensuring that sanctions applied are proportionate to any violations, and taking steps to ensure that supervision does not disrupt or discourage legitimate NPO activity, such as fundraising. Türkiye is therefore no longer subject to the FATF’s increased monitoring process.

Türkiye should continue to work with the FATF to sustain its improvements in its AML/CFT system, including by continuing to ensure its oversight of the NPO sector is risk-based and in line with the FATF standards.

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.

Corruption remains a significant issue in Türkiye, as evidenced by its low ranking in Transparency International's Corruption Perceptions Index and inadequate government mechanisms for investigating and punishing corruption. Despite reforms aimed at increasing transparency in public procurement, critics argue that favoritism persists in awarding contracts to companies aligned with the ruling party. While Turkish law prohibits bribery and aligns with international standards, enforcement is inconsistent, and Türkiye has been placed under increased monitoring by the Financial Action Task Force due to deficiencies in its anti-money laundering and counter-terrorist financing measures.

Turkey's economy experienced robust growth from 2002 to 2007 and managed to navigate the 2008-2009 global economic crisis relatively well, establishing itself as a stable emerging market. However, recent years have seen economic and democratic reforms stall, with significant currency depreciation and high inflation rates impacting the economy, leading to vulnerabilities against external shocks. Despite a notable GDP growth of 11% in 2021, the Turkish lira has lost substantial value, and ongoing challenges such as unorthodox monetary policies and high current account deficits continue to pose risks.

Turkey's investment climate is characterized by a liberal foreign direct investment (FDI) regime that treats foreign and domestic investors equally, although opaque rulemaking and legislative processes pose risks. In 2022, Turkey attracted $6.48 billion in FDI equity capital, with incentives promoting green and renewable investments, despite challenges such as macroeconomic instability and high inflation. The country's large domestic market, skilled workforce, and strategic location positively influence its investment environment, although localization requirements in certain sectors may pressure foreign investors to partner with local firms.