Navigating the intricacies of legal frameworks is imperative, especially when it comes to combating financial crimes like money laundering. In the realm of Turkish law, understanding the nuances of Anti-Money Laundering (AML) regulations is paramount. As a law firm deeply rooted in the principles of justice, Alfa Law Firm takes a comprehensive look at the legal landscape surrounding money laundering in Turkey. From the definition of money laundering to the enforcement mechanisms deployed by institutions such as the Financial Crimes Investigation Board (MASAK), in this article, we delve into the legal intricacies that govern financial integrity.

Please keep on reading for legal exploration as we shed light on the AML obligations, regulations, and penalties that shape the fight against financial crimes in Turkey.

What Is Money Laundering?

Money laundering is the process of concealing the illegal origin of money obtained from criminal activities. Anti Money Laundering (AML) regulations are the laws and measures that aim to prevent and combat money laundering and terrorist financing.

As a beacon of legal expertise, Alfa Law Firm in Turkey stands ready to assist individuals and institutions in navigating these complexities, ensuring that legal conditions are met most properly. Whether you’re a new investor or seek legal support for managing financial flows, our English-speaking lawyers in Turkey and multi-language-speaking solicitor teams are dedicated to providing comprehensive legal solutions. Alfa Law Firm promotes legal integrity, offering support to those investing ethically and legally within Turkey’s banking system.

How Do Anti-Money Laundering Compliance Obligations Work?

Anti-money laundering (AML) obligations are the legal and regulatory requirements that aim to prevent and combat money laundering and terrorist financing. Money laundering is the process of concealing the illegal origin of money obtained from criminal activities. Terrorist financing is the provision or collection of funds for terrorist purposes.

Different countries and jurisdictions have different AML obligations, depending on their laws and regulations. However, some common AML obligations that apply to most financial institutions and other entities that are subject to AML rules are:

  • Conducting customer due diligence (CDD) to verify the identity and beneficial ownership of their customers and assess their risk profile.
  • Reporting suspicious transactions and activities to the relevant authorities, such as the Financial Intelligence Unit (FIU) or the Financial Crimes Enforcement Network (FinCEN).
  • Keeping records of customer information and transactions for a certain period of time, usually five to ten years.
  • Implementing internal controls and policies to ensure compliance with AML obligations and prevent money laundering and terrorist financing risks.
  • Providing training and awareness to staff and management on AML obligations and procedures.
  • Undergoing regular audits and inspections by the regulators or external auditors to evaluate the effectiveness and compliance of their AML program.

What are the Legal Regulations in Turkey in regards to AML?

In Turkey, the main law that regulates AML is Law No. 5549 on Prevention of Laundering Proceeds of Crime, enacted in 2006. This law outlines the obligations of financial institutions, reporting entities, and supervisory bodies in the fight against money laundering and terrorist financing. The law also establishes the Financial Crimes Investigation Board (MASAK) as the primary authority for AML in Turkey. MASAK is responsible for developing AML policies and measures, conducting research on obligated sectors, investigating and examining institutions and transactions, and imposing sanctions in case of violation.

Turkey is also a member of the Financial Action Task Force (FATF), an international organization that sets standards and promotes the effective implementation of AML and counter-terrorist financing (CFT) measures. Turkey has undergone several assessments by the FATF to evaluate the effectiveness and compliance of its AML/CFT system. The latest assessment was published in 2019, which identified some shortcomings and areas for improvement in Turkey’s AML/CFT framework. Turkey has reported its progress in addressing these issues to the FATF in 2021 and 2022.

How Does MASAK Enforce AML Regulations in Turkey?

As we clarified above, the institution MASAK is the main authority for enforcing AML regulations in Turkey. It has the power to:

  • Develop policies and measures to prevent and combat money laundering and terrorist financing.
  • Conduct research on obliged sectors and their risks and vulnerabilities.
  • Investigate and examine institutions and transactions that are suspected of being involved in money laundering or terrorist financing.
  • Impose administrative sanctions, such as fines, warnings, or suspensions, on obliged parties who violate their AML obligations.
  • Share intelligence and information with other domestic and international authorities, such as the Ministry of Finance, the Central Bank, the Banking Regulation and Supervision Agency, the Capital Markets Board, the Financial Action Task Force, and the Egmont Group.

MASAK also requires obligated parties to establish and operate a risk-based AML compliance program, which includes creating corporate policies and procedures, performing risk management and monitoring activities, assigning a compliance officer and a compliance unit, conducting training and internal control activities, and reporting suspicious transactions to MASAK.

Can Individuals Report Suspicious Activities to MASAK?

In line with the regulations in force, individuals cannot directly report suspicious activities to MASAK. Only the obligated parties, such as financial institutions, legal professionals, and other entities that are subject to AML regulations, can report suspicious transactions to MASAK.

What are the Penalties for Money Laundering in Turkey?

According to the Turkish Criminal Code, the penalties for violating AML regulations in Turkey are as follows:

  • For laundering the proceeds of crime, the penalty is imprisonment from two to five years and a judicial fine up to twice the amount of the laundered money. Additionally, the assets that are subject to the laundering offense may be confiscated.
  • For purchasing, acquiring, possessing, or using the proceeds of crime, knowing their illicit origin, the penalty is imprisonment from one to three years and a judicial fine of up to one thousand days.
  • For obligated parties who fail to comply with their AML obligations, such as reporting suspicious transactions, providing information and documents, and retaining records, the penalty is imprisonment from one to three years and a judicial fine of up to five thousand days.

These penalties may be increased or reduced depending on the circumstances and aggravating or mitigating factors of each case.

Conclusion

In the wake of recent criminal incidents and alarming reports of money laundering in Turkey, the nation finds itself navigating a challenging position on the global stage. Despite the commendable efforts of Turkish authorities and independent judicial bodies, notably MASAK, in actively pursuing irregularities and instances of money laundering, the surge in such negative situations can, at times, cast a shadow of concern over honest individuals, foreign investors, and companies contemplating investments within the country.

At Alfa Law Firm, we staunchly stand against all forms of illegal money laundering incidents and attempts. Our commitment extends beyond a mere legal standpoint; we are poised to address the specific legal needs of individuals and institutions aspiring to invest in Turkey or manage their financial assets securely within the banking system. Whether you’re a burgeoning investor seeking guidance or an established company requiring legal support for intricate financial management, Alfa Law Firm is unwaveringly by your side.

Our team of English-speaking lawyers in Turkey is geared to provide you with tailored legal solutions, ensuring adherence to all legal conditions in the most appropriate manner. At Alfa Law Firm, we embody the ethos of legal integrity, providing unwavering support to those dedicated to lawful and ethical investments in the Turkish landscape. Contact us now for any legal consultancy and advisory regarding AML procedures and legal obligations.