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 is a significant issue in Türkiye, highlighted by its drop in Transparency International's Corruption Perceptions Index, where it ranked 115th out of 180 countries in 2023, down from 96th in 2021. Despite having laws against bribery and participating in anti-corruption initiatives, enforcement remains inconsistent, and government interference in the judiciary hampers investigations. While reforms have been introduced to enhance transparency in public procurement, critics argue that favoritism persists, particularly in awarding contracts to allies of the ruling party.

In 2023, Türkiye's GDP grew by 4.5 percent year-over-year, a decrease from 5.5 percent in 2022, with forecasts of 4 percent growth in 2024 and 4.5 percent in 2025. The country faced significant inflation averaging 65 percent, driven by supply constraints and excess monetary supply, while the Turkish lira lost 37 percent of its value against the dollar. Türkiye's economic vulnerabilities include high current account deficits and substantial damage from the 2023 earthquakes, which have made it susceptible to external economic shocks.

Turkey's investment climate is bolstered by its large domestic market, favorable demographics, and a skilled workforce, alongside a liberal foreign direct investment regime that treats foreign investors equally to domestic ones. However, challenges such as opaque rulemaking, macroeconomic instability, and high inflation have led to a decline in foreign direct investment inflows, which totaled $5.6 billion in 2023, down from $6.5 billion in 2022. The government is actively promoting investment through various incentives, particularly in green and renewable sectors, while also addressing concerns related to geopolitical risks and compliance with international regulations.