Turkey Takes Steps to Fight Financing of Terrorism and Corruption

Turkey took further steps in 2016 to fight corruption and the financing of terrorism. The Council of Europe Convention on Laundering, Search, Seizure and Confiscation of the Proceeds from Crime and on the Financing of Terrorism was ratified by Parliament in early 2016. The Prime Ministry shortly thereafter issued a three-year action plan to further fight corruption and increase transparency. Secondary legislation to strengthen the Council of Europe Convention has been issued, however, to date there have been no legislative changes made to implement the Prime Ministry’s action plan.

Fighting Financing of Terrorism

Nine years after signing, the Turkish Parliament ratified and thus enacted into law the Council of Europe Convention on Laundering, Search, Seizure and Confiscation of the Proceeds from Crime and on the Financing of Terrorism. The Convention requires each signatory to establish, among other things, a financial intelligence unit to fight against money laundering and the financing of terrorism. In Turkey this duty is fulfilled by the Financial Crimes Investigation Board (Mali Suçları Araştırma Kurulu) (“MASAK”), which was established in 1997 by the now-obsolete Law No. 4208, the Law on the Prevention of Money Laundering.

As part of the secondary legislation for implementation of the Council of Europe Convention, the Ministry of Finance enacted the Regulation on the Suspension of Suspicious Transactions on July 29, 2016. The Regulation governs transactions for which there is reasonable ground to suspect that they are related to money laundering or the financing of terrorism.

According to the Regulation, a transaction may be suspended by MASAK if;

1. MASAK is notified by an institution defined as an “obliged party” (including banks and other financial institutions) that the transaction in question is “suspicious”;
2. MASAK determines that the transaction is related to money laundering or the financing of terrorism; or
3. a foreign anti-money laundering institution reports the transaction as suspect.

The Guidelines on Suspicious Transactions, issued by the Ministry of Finance and MASAK, contains a very broad definition of what constitutes a “suspicious transaction” that may be subject to suspension under the Regulation. Suspicious transactions includes transactions of an “extraordinary nature” such as the granting of high-value loans, voluntary prepayment of loans or the transferring of sums larger than normal.

If a transaction is deemed suspicious by an obliged party and MASAK is notified, the transaction will be postponed pending a final decision by the Ministry of Finance.

Steps to Fight Corruption

In addition to steps taken to fight money laundering and the financing of terrorism, Turkey also took steps to fight corruption.

In May 2016, the Prime Ministry issued an action plan for 2016-2019 which outlines steps to be taken to fight corruption and increase transparency. It establishes a Commission for the Increase of Transparency and Strengthening of the Fight Against Corruption (Türkiye’de Saydamlığın Artırılması ve Yolsuzlukla Mücadelenin Güçlendirilmesi Komisyonu). The Commission, slated to report to the Deputy Prime Minister, is to be composed of the Ministers of Justice, Labor and Social Security, Customs and Trade, Internal Affairs and Economy.

The steps outlined in the action plan include enacting new legislation and amending various existing laws. For example, Law No. 3628 on the Declaration of Assets and Fighting Against Bribery and Corruption (Mal Bildiriminde Bulunulması, Rüşvet ve Yolsuzluklarla Mücadele Kanunu) will be amended to ensure more effective implementation, although the action plan does not outline the scope of this amendment. Other legislation to be amended within the scope of the action plan includes various laws applicable to the duties and authorities of appropriate government offices.