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 the inadequacy of government mechanisms to address corruption among state officials. Despite reforms aimed at increasing transparency in public procurement, critics argue that favoritism persists in contract awards, particularly for projects linked to the ruling party. While Turkish law prohibits bribery and aligns with international standards, enforcement is inconsistent, and the country is under increased monitoring for deficiencies in combating money laundering and terrorist financing.

Turkey's economy experienced robust growth from 2002 to 2007 and showed resilience during the 2008-2009 global economic crisis, but has faced significant challenges in recent years, including high inflation and currency depreciation. In 2021, Turkey's GDP grew by 11 percent, the highest in a decade, yet the Turkish lira lost substantial value, leading to vulnerabilities exacerbated by unorthodox monetary policies and the impact of natural disasters. As of 2023, growth is projected at around three percent, amidst ongoing economic instability and external risks.

Turkey has a liberal foreign direct investment (FDI) regime that treats foreign investors equally to domestic ones, with minimal restrictions on acquisitions. However, challenges such as macroeconomic instability, excessive bureaucracy, and a slow judicial system persist, alongside risks from opaque rulemaking and geopolitical tensions. Despite these issues, Turkey's large domestic market, favorable demographics, and strategic location continue to attract foreign investment.