GAFI Removes Turkey from Grey List after Significant Progress in Combating Money Laundering
The Financial Action Task Force (FATF), an international organization we are familiar with, has removed Turkey from its grey list of countries requiring enhanced surveillance due to money laundering concerns. Turkey had been on the list since 2021, accused of failing to supervise its banking and real estate sectors, as well as other areas vulnerable to money laundering and terrorist financing, including the Islamic State in Iraq and Syria.
The FATF announced in a statement that Turkey had made significant progress in addressing these shortcomings. Turkish authorities welcomed this development, which is expected to boost international investors' confidence in the country's financial system and have positive repercussions on the real economy. Being under increased scrutiny by the FATF had contributed to the paralysis of the local economy in recent years.
The government's delay in taking necessary measures was linked to the amnesty law on undeclared wealth, promulgated in July 2022. According to this law, individuals and entities had until March 31, 2023, to bring undeclared cash, gold, and other assets into the country from abroad, without fear of audit or investigation. This law effectively granted immunity to money launderers, drug traffickers, and others transferring their wealth to Turkey. Those already under government audit could also exploit this law by claiming that the wealth in question was obtained through such transfers. The goal was to attract as much foreign currency as possible to a country whose local currency had been severely devalued against the US dollar and euro.
In practice, the Turkish government has taken a series of measures to achieve its goal. The most important one was the promulgation of legislation on cryptocurrencies. This was a necessary step, as all reports indicated that terrorist groups in the region had used intermediaries in Turkey, as well as fund transfer apps and cryptocurrencies, to finance their activities.
Cryptocurrency service providers will be required to obtain an operating license from the regulator within a month of the law's entry into force. Foreign companies will also have to cease their activities targeting Turkish residents within three months, or risk being classified as unauthorized cryptocurrency service providers.
In case of non-compliance, these service providers will be held responsible for illegal activities and information security breaches. Furthermore, members of their boards of directors will also be subject to provisions related to embezzlement.
We can say that Ankara has accepted to sacrifice this $170 billion industry in terms of transaction volume to get off the list. A choice that may not please young people and several Bitcoin investors.
