Turkey is taking action to get out of the Financial Action Task Force’s (FATF) ‘grey list’ of countries with insufficient anti-money laundering restrictions. To ensure the same, it is now seeking to propose fresh legislation on crypto assets.
The Financial Action Task Force (FATF) is the global money laundering and terrorist financing watchdog, set up by the G7 group of advanced economies to protect the global financial system. It places international standards that aim to prevent these illegal activities and the harm they cause to society.
Turkey’s finance minister, Mehmet Simsek, revealed that being fully compliant with the FATF’s standards as one of the main priorities left to be resolved. This was expressed in parliamentary commission on Tuesday, 31 October 2023.
Back in 2021, the international watchdog demoted the country to the grey list for failing to avert money laundering and terrorist financing. FATF president Marcus Pleyer commented on this saying that the country needs to address “serious issues of supervision” in its banking and real estate sectors.
Addressing the commission yesterday, Simsek said a FATF report found Turkey fully compliant with all but one of the watchdog’s 40 standards. This issue was associated with the technical compliance in the work related to crypto assets.
The government now plans to propose a law on crypto-assets to the parliament as soon as possible. After that, there would be no reason for Turkey to be in the grey list, said the finance minister.
Talking about the country’s progress in applying the recommendations, the FATF said in its official website that Turkey is compliant with 12 recommendations, largely compliant with 22 recommendations, but remains partially compliant with four and non-compliant on two recommendations.
Dealing with new technologies and the recommendations on the same given by FATF was where Turkey stood as partially-compliant, according to a follow-up report of 2023.
However, the regulator also acknowledged the fact that the country has been in an enhanced follow-up process. Following the completion of a national risk assessment in 2018, it said: “Due to its geographic location, the country faces the greatest money laundering risks from drug trafficking, migrant smuggling, human trafficking and fuel smuggling. The country also faces significant terrorist financing risks from both national and international threats.”
On the other side, crypto adoption has been rising significantly in the country as it battles with high inflation. In the past year and a half, adoption has increased from 40 to 52 per cent of the Turkish population, as per a survey by KuCoin.
In September, founder of collapsed Turkish exchange Thodex, Faruk Fatih Özer, was sentenced to 11,196 years in prison along with his two siblings. It was one of the country’s largest crypto exchanges before it fell apart in April 2021.
As per reports, over 400,000 users were unable to access more than $2billion worth of crypto deposits. Özer has also been handed a fine of 135 million Liras, facing seven charges, including creating an organisation with the aim of committing a crime, fraud by using information systems, banks or credit institutions as tools, and laundering the assets of merchants or company managers and cooperative managers resulting from fraud and crime.
