Mutual Evaluation Report - FATF-GAFI.ORG

1 Anti-money laundering and counter-terrorist financing measures turkey Mutual Evaluation Report December 2019. The Financial Action Task Force (FATF) is an independent inter-governmental body that develops and promotes policies to protect the global financial system against money laundering, terrorist financing and the financing of proliferation of weapons of mass destruction. The FATF Recommendations are recognised as the global anti-money laundering (AML) and counter-terrorist financing (CTF). standard. For more information about the FATF, please visit the website: This document and/or any map included herein are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area. This assessment was adopted by the FATF at its October 2019 Plenary meeting.

2 Citing reference: FATF (2019), Anti-money laundering and counter-terrorist financing measures turkey , Fourth Round Mutual Evaluation Report , FATF, Paris 2019 FATF-. All rights reserved. No reproduction or translation of this publication may be made without prior written permission. Applications for such permission, for all or part of this publication, should be made to the FATF Secretariat, 2 rue Andr Pascal 75775 Paris Cedex 16, France (fax: +33 1 44 30 61 37 or e-mail: Photo Credit - Cover: Getty Images Table of Contents Executive Summary .. 3. Key Findings .. 3. Risks and General Situation .. 5. Overall Level of Compliance and Effectiveness .. 5. Priority Actions .. 10. Mutual Evaluation 13. Preface .. 13. CHAPTER 1. ML/TF RISKS AND CONTEXT .. 15. ML/TF Risks and Scoping of Higher Risk Issues .. 16. Materiality.)

3 18. Structural 19. Background and Other Contextual Factors .. 19. CHAPTER 2. NATIONAL AML/CFT POLICIES AND 29. Key Findings and Recommended Actions .. 29. Immediate Outcome 1 (Risk, Policy and Co-ordination) .. 30. CHAPTER 3. legal SYSTEM AND OPERATIONAL 43. Key Findings and Recommended Actions .. 43. Immediate Outcome 6 (Financial Intelligence ML/TF) .. 46. Immediate Outcome 7 (ML Investigations and Prosecution) .. 54. Immediate Outcome 8 (Confiscation) .. 63. CHAPTER 4. TERRORIST FINANCING AND FINANCING OF 77. Key Findings and Recommended Actions .. 77. Immediate Outcome 9 (TF Investigation and Prosecution) .. 81. Immediate Outcome 10 (TF Preventive Measures and Financial Sanctions) .. 92. Immediate Outcome 11 (PF Financial Sanctions) .. 99. CHAPTER 5. PREVENTIVE MEASURES ..103. Key Findings and Recommended Actions.

4 103. Immediate Outcome 4 (Preventive Measures) .. 104. CHAPTER 6. SUPERVISION ..123. Key Findings and Recommended Actions .. 123. Immediate Outcome 3 (Supervision) .. 124. CHAPTER 7. legal PERSONS AND ARRANGEMENTS ..139. Key Findings and Recommended Actions .. 139. Immediate Outcome 5 ( legal Persons and Arrangements) .. 140. CHAPTER 8. INTERNATIONAL CO-OPERATION ..149. Key Findings and Recommended Actions .. 149. Immediate Outcome 2 (International Co-operation) .. 150. Anti-money laundering and counter-terrorist financing measures in turkey FATF| 2019. 2 . Technical Compliance Annex ..161. Recommendation 1 Assessing Risks and Applying a Risk-Based Approach .. 161. Recommendation 2 - National Co-operation and 164. Recommendation 3 - Money Laundering Offence .. 165. Recommendation 4 - Confiscation and Provisional Measures.

5 167. Recommendation 5 - Terrorist Financing Offence .. 168. Recommendation 6 - Targeted Financial Sanctions Related to Terrorism and Terrorist Financing .. 170. Recommendation 7 Targeted Financial Sanctions Related to Proliferation .. 174. Recommendation 8 Non-Profit Organisations .. 176. Recommendation 9 FI Secrecy Laws .. 182. Recommendation 10 Customer Due Diligence .. 183. Recommendation 11 Record 188. Recommendation 12 Politically Exposed Persons .. 189. Recommendation 13 Correspondent Banking .. 190. Recommendation 14 Money or Value Transfer Services .. 191. Recommendation 15 New 192. Recommendation 16 Wire Transfers .. 193. Recommendation 17 Reliance on Third Parties .. 196. Recommendation 18 Internal Controls and Foreign Branches and Subsidiaries .. 197. Recommendation 19 Higher Risk Countries .. 199. Recommendation 20 Reporting of Suspicious Transactions.

6 200. Recommendation 21 Tipping-Off and Confidentiality .. 201. Recommendation 22 DNFBPs: Customer Due Diligence .. 201. Recommendation 23 DNFBPs: Other Measures .. 202. Recommendation 24 Transparency and Beneficial Ownership of legal Persons .. 203. Recommendation 25 Transparency and Beneficial Ownership of legal Arrangements .. 206. Recommendation 26 Regulation and Supervision of FIs .. 207. Recommendation 27 Powers of Supervisors .. 209. Recommendation 28 Regulation and Supervision of DNFBPs .. 210. Recommendation 29 - Financial Intelligence Units .. 211. Recommendation 30 Responsibilities of Law Enforcement and Investigative Authorities .. 214. Recommendation 31 - Powers of Law Enforcement and Investigative Authorities .. 215. Recommendation 32 Cash Couriers .. 216. Recommendation 33 Statistics .. 218. Recommendation 34 Guidance and 219.

7 Recommendation 35 Sanctions .. 220. Recommendation 36 International Instruments .. 222. Recommendation 37 - Mutual legal Assistance .. 222. Recommendation 38 Mutual legal Assistance: Freezing and Confiscation .. 224. Recommendation 39 extradition .. 225. Recommendation 40 Other Forms of International Co-operation .. 226. Summary of Technical Compliance Key Glossary of Acronyms ..234. Anti-money laundering and counter-terrorist financing measures in turkey FATF| 2019. Executive Summary 1. This Report summarises the AML/CFT measures in place in the Republic of turkey as at the date of the on-site visit (05-21 March 2019). It analyses the level of compliance with the FATF 40 Recommendations and the level of effectiveness of turkey 's AML/CFT system, and provides recommendations on how the system could be strengthened.

8 Key Findings a) turkey finalised a combined ML/TF risk assessment in 2018 The NRA was a significant step in enhancing turkey 's understanding of ML/TF risk. Relevant authorities contributed to the process, with positive input from the private sector. Turkish authorities have a general understanding of ML. This understanding is greater than that represented in the NRA. TF risk is understood well by key agencies such as TNP and MASAK. This understanding of ML/TF would benefit from overarching, formal strategies and policies to combat ML/TF. Authorities have commenced work in these areas. b) There are demonstrable mechanisms for co-ordination in place, although their effectiveness for AML/CFT purposes is mitigated to some extent, as AML/CFT co- ordination has not been brought together under a single whole-of-government policy approach, which is both risk-based and demonstrably co-ordinates measures taken.

9 C) turkey has demonstrated the use of MASAK's financial intelligence products to support ongoing investigations and prosecution of predicate, ML and TF offences. MASAK's work has increased many fold since the attempted coup in 2016 with an exponential rise in judicial requests from public prosecution and courts, which has caused strains on the capacity of AML/CFT authorities. The extent to which financial intelligence is used routinely in existing ML cases or developing evidence across all the law enforcement agencies is not demonstrated. d) turkey 's law enforcement agencies have trained and dedicated investigators. However, identifying ML activity for investigation through their analysis of STRs and other reports submitted to MASAK, or through investigation of offences generating proceeds of crime is not commensurate with the risk profile in turkey .

10 While turkey does not have detailed statistics on ML investigations by predicate offence, they provided statistics for the four highest risk predicate offence supported with a sampling of cases, which Anti-money laundering and counter-terrorist financing measures in turkey FATF| 2019. 4 | EXECUTIVE SUMMARY. 4 . suggests that ML offences and activities are investigated to some extent. e) turkey has an adequate legal framework that should enable the authorities to confiscate the proceeds of crime through a number of measures, but limited statistical figures or other evidence were provided by turkey to fully demonstrate the good use of these tools. However, after the attempted coup in 2016, turkey enacted temporary measures, which were effectively implemented against FET /PDY. Although turkey has demonstrated the existence of high-level commitment to deprive criminals from their proceeds of crime, its practical impact to ensure that criminals are permanently deprived of their illicit gains is less evident.