• Money Laundering, Asset Forfeiture, Recovery and Compliance, the Country Report of Turkey
  • October 11, 2012
  • Law Firm: HERDEM&Co. Attorneys At Law - Istanbul Office
  •  

    In particular due to its location bridging Europe to Asia attracts the foreign criminal organizations of migrant smuggling, terrorism and narcotics. Turkey hosted many brass plate companies in the past set for the purpose of placement, layering and integration of laundering transactions by 1990s.

    The first systematic drug trafficking and money laundering dates to the 1960s during Turkish immigration to Germany. Between the years of 1980s-1990s, due to the increase in illicit production and shadow economy and the lack of regulated financial institutions and effective laws, usury, in a form of typical business as a laundering method was very common.

     

    The effects of globalization, increase in financial institutions and transnational business operations after 1990s required to regulate the financial market and to handle the matter of laundering both in domestic and international standards.  For that purpose Turkey enacted its first regulation, law no 4802 in 1996. Even it is still defined as high risk jurisdiction in 2011 it came a long way to prevent laundering acts. Especially after 1988, the criminal organizations launched   intensive anti-money laundering activities through off shore banking and almost none of these money laundering activities have been charged due to the lack of regulations. 

     

    Turkish National Police has divulged the 180 methods of laundering in 2004 that some of are as follows; to enter the privatization tenders, lotteries and games of chance and to reach people who win the lottery to buy their ticket, beach services, establishment a touristic resort, expensive ship / yacht trading, owning a car, buying precious metals, to go to the capital increase in companies, art and historical artifacts, enter the financial markets, opening shopping centers, to use false or inflated invoices, to open a casino and betting businesses in Turkish Republic of Northern Cyprus, the tax exemption from the countries.

     

    In today’s Turkey, in parallel with the developments of financial tools and diversity of financial systems, professionals such of financial, legal advisors, insurance companies or private bankers are used for laundering. When compared with recent years, since the volume of the money especially in terrorist financing has been increased and the increase in terrorist organizations to involve ordinary crimes to provide financial, the largest portion of laundering consists of speculation, smuggling, racketeering, aggravated fraud and bankruptcy, forgery on documents, producing and using counterfeit documents organ smuggling, kidnapping, arms trafficking, historical artifact smuggling, loan-backs, snatching and brass plate companies.

     

    Besides, the hidden local-foreign partnerships shown as “investor” in capital markets and private equities choose smurfing through speculations and fraud investments. Such transactions have been reported by banks and financial institutions mostly with suspicion of unbalanced financial status and the volume of the transaction (22%), unreasonable transactions (20,6%) and suspicious cash flows (14,5%).[1]

     

    Turkey has also regulated its free trade zones and liaison office regulations in 2012 to prevent laundering through business organizations of transit trade. The new regulations lifted the effectiveness of inspections by central and local government authorities. However, especially due to the lack of inspection in eastern part of the country, there is still a potential risk of Syrian, Iranian, Iraqi drug traffickers and terrorist financing.

     

     

    B. Turkey’s Compliance with the 40 FATF Recommendations and Nine Special Recommendations

     

    The Financial Action Task Force (“FATF”) is an inter-governmental body founded in 1989 by the G7.  FATF was developed to combat money laundering and terrorist financing.  FATF outlines 40 recommendations and nine special recommendations in order for compliant countries to curb the growth of money laundering and terrorist financing. 

     

    Turkey is a member of FATF since 1991 and observer to EAG, the Euroasian Group of FATF.   The FATF last released a mutual evaluation report in the February of 2007 and public statement for compliance for Turkey in the June of 2011.

     

    1) 40 Recommendations

     

    The FATF outlines 40 recommendations in order for countries to comply with to deter money laundering. Of the 40 recommendations, Turkey is compliant with three, largely compliant with eleven, partially compliant with fifteen, and non-compliant with ten of the recommendations (5, 6, 7, 9, 11, 12, 16, 21, 22, and 24). Since trusts do not exist under Turkish law, recommendation 34 in this regard is not applicable. In February of 2012, The FATF Standards have been revised to strengthen global safeguards and further protect the integrity of the financial system by providing governments with stronger tools to take action against financial crime. At the same time, these new standards will address new priority areas such as corruption and tax crimes.[2]

     

                            a) Recommendation Five

     

    Recommendation Five requires that financial institutions have adequate controls and procedures to recognize the new and existing customers and record keeping.

     

    The only explicit customer due diligence (CDD) requirement is customer identification in Turkey and it is not specified whether identification must be conducted for linked transactions below the TRY 12,000 threshold. Customer verification of natural persons only partially complies with international standards however there are no verification requirements for legal persons, associations, and foundations.

    Besides, documents authorizing a natural person to conduct transactions on behalf of a legal person are required as part of customer identification in accordance with primary or secondary law for legal persons registered in Trade Registry, but not for foundations or associations.

    There is only a very limited provision, which is not yet implemented in supporting regulation, requiring the identification of the beneficial owner, and financial institutions are not required to take reasonable steps to understand the layers of ownership and control of legal persons which are their customers.  

    Measures for collection of information on the purpose and nature of the relationship for legal persons are only contained in unenforceable guidelines. There is no provision applicable for insurance.

    Measures for enhanced CDD for sensitive countries, sensitive business and higher risk customers, are only contained in non-mandatory and unenforceable guidelines and this is largely undefined. 

    There are no clear CDD requirements for the financial sector other than those for banks.

    The exemption of requirements for identification for transactions carried out with central and local public administrations, state economic enterprises, quasi public institutions, banks and participation banks are overly broad. 

    There are no clear requirements to conduct ongoing CDD[3]

     

                            b) Recommendation Six

     

    Recommendation Six requires that financial institutions have appropriate risk management systems in place to determine whether the customer is a politically exposed person (“PEP”), obtain senior management approval for PEPs, take reasonable measures to established the source of wealth and source of funds for a PEP, and conduct enhanced ongoing monitoring of the business relationship with a PEP.

     

    Turkey has not implemented anti-money laundering (AML) / counter-terrorist financing (CFT) measures concerning establishment of customer relationships with PEPs.[4]

     

                            c) Recommendation Seven

     

    Recommendation Seven is related with the targeted financial sanctions related to proliferation aimed at ensuring consistent and effective implementation of targeted financial sanctions when these are called for by the UN Security Council. Recommendation 7 is applicable to all current Security Council resolutions applying targeted financial sanctions relating to the financing of proliferation of weapons of mass destruction,  any future successor resolutions, and any future Security Council resolutions which impose targeted financial sanctions in the context of the financing of proliferation of weapons of mass destruction. At the time of issuance of this Recommendation, (February 2012), the Security Council resolutions applying targeted financial sanctions relating to the financing of proliferation of weapons of mass destruction are: resolutions 1718 (2006), 1737 (2006), 1747 (2007), 1803 (2008), 1874 (2009), and 1929 (2010).[5]

     

    Turkey is non-compliant with recommendation seven for the following reasons:

     

    i) Turkey does not address correspondent banking in law or regulation.

    ii)  Turkey has not implemented Recommendation 7. Again, the TBA has issued guidance on this issue, but that guidance is unenforceable and it is only issued to banks.  While TBA guidance is implemented in fact by many banks in Turkey it does not deal with payable through accounts or the share of responsibilities between the institutions involved in the transaction are dealt.  In practice, the Turkish authorities and representatives of the private sector indicated that Turkish banks have no correspondent banking relationship with foreign banks, nor payable through accounts relationships.[6]

     

                            d) Recommendation Nine

     

    Recommendation nine outlines the criteria for countries should ensure that financial institution secrecy laws. Accordingly, Financial institutions should, in relation to cross-border correspondent banking and other similar relationships, gather sufficient information about a respondent institution and assess the respondent institution's anti-money laundering and terrorist financing controls.[7]

     

    Turkey is non-compliant with this recommendation for the following reason:

     

    i) There is no law, regulation or enforceable guidance, outside of the securities’ sector, on the use of third parties to perform CDD under Turkish law.[8]

     

                            e) Recommendation Eleven

     

    Recommendation eleven requires financial  institutions to maintain all necessary records on transactions, both domestic and international, to enable  them  to comply  swiftly  with information  requests  from the competent authorities.[9]

     

    Turkey is non-compliant with this recommendation for the following reasons:

     

    i) Turkey has not implement Recommendation eleven as there is no requirement to establish the purpose and background of unusual transactions or to maintain this information in writing and keep records which will be accessible by authorities.[10]

     

                            f) Recommendation Twelve

     

    Recommendation twelve requires designated non-financial businesses and professions to  pay  attention to money laundering and terrorist financing transactions.   

     

    Turkey is non-compliant with this recommendation because of the following reasons:

     

    i) Lawyers, accountants and other legal professionals are not obliged parties.

    ii) Turkey’s general shortcomings in implementation of Recommendations 5, 6 and 8-11 also apply to designated non-financial businesses and professions.

    iii) There are questions about the effectiveness of implementation of customer identification and record keeping requirements in obliged designated non-financial businesses and professions.[11]

     

                                        g) Recommendation Sixteen

     

    Recommendation sixteen aims to provide suspicious transaction reporting (STR) by designated non-financial businesses and professions.

     

    Turkey is non-compliant for the following reasons:

     

    i) Accountants, lawyers and other legal professionals are not required to submit STRs and are not subject to other measures covered by Recommendations 14, 15 and 21.

    ii) Designated non-financial businesses and professions are not obliged to have compliance officers or internal control programmes.

    iii) Designated non-financial businesses and professions are not required to conduct in-house training or screen potential employees. 

    iv) Limited training has been provided to designated non-financial businesses and professions.

    v) Designated non-financial businesses and professions are not required to pay special attention to transactions with countries which do not or do not adequately implement the FATF Recommendations.  

    vi) No STRs have been submitted by designated non-financial businesses and professions, which calls into question the effectiveness of implementation of Recommendation 13 in this sector.[12]

     

    g) Recommendation Twenty-One

     

    Recommendation twenty-one prohibits financial institutions, their directors, officers and employees from disclosing the fact that an STR or related information is being reported to the financial intelligence unit (FIU).[13]

     

    Turkey is non-compliant for not implementing the Recommendation twenty-one.

     

    g) Recommendation Twenty-Two

     

    Recommendation twenty-two requires financial institutions to ensure that the principles applicable to financial institutions, which are mentioned above are also applied to branches and majority owned subsidiaries located abroad, especially in countries which do not or insufficiently apply the FATF.[14]

     

    Turkey is non-compliant for the following reasons:

     

    i) Article 4 of the Regulation Regarding Implementation of the Law 4208 providing for application of customer identification requirements to overseas branches and subsidiaries has not been implemented.

    ii) Internal control provisions for overseas branches and subsidiaries only exist for banks, not for any other obliged parties.

    iii) There is no requirement to pay particular attention where branches and subsidiaries are in countries which do not or insufficiently apply the FATF Recommendations.  

    iv)  There is no requirement to apply the higher of the two countries’ standards.

    v) There is no requirement to inform supervisors when a foreign branch or subsidiary is unable to observe appropriate AML/CFT measures due to host country restrictions.[15] 

     

    g) Recommendation Twenty-Four

     

    Recommendation twenty-four requires designated non-financial businesses and professions should be subject to regulatory and supervisory measures, for example Casinos should be subject to a comprehensive regulatory and supervisory regime that

    ensures  that  they have  effectively  implemented the  necessary  anti-money laundering and terrorist-financing measures.[16]

     

    Turkey is non-compliant for the following reasons:

     

    i) No systems exist for monitoring and ensuring compliance of designated non-financial businesses and professions with AML/CFT requirements.[17]

     

                2) Nine Special Recommendations

     

    The FATF outlines nine special recommendations for countries to comply with to further anti-terrorist financing goals.  Of the nine special recommendations, Turkey is currently largely compliant with one and partially compliant with eight special recommendations.

     

    C. INCSR Rating

     

    Every year the International Narcotics Control and Strategy Report compiles a list of countries of concern for money laundering.  The list is based on the countries that are vulnerable to money laundering or terrorist financing. The International Narcotics Control and Strategy Report of 2012 placed Turkey on the list of countries/jurisdictions of primary concern for money laundering and terrorist financing.[18]

     

    Turkey is on the list of countries/jurisdictions of primary concern for the following reasons:

     

    i) In “All serious crimes” approach or “list” approach to predicate crimes, all serious crimes and legal persons are covered by criminally and civilly.

    ii) It should ensure the enhanced due diligence procedures.

    iii) It should increase the STRs requirements

    iv) The non-profit sector is vulnerable to terrorist financing. Turkey‘s investigative powers, law enforcement capability, and supervisory oversight are weak and lacking in all the necessary tools and expertise to effectively counter this threat through a comprehensive approach; all these areas need to be strengthened.

    v) The nonprofit sector is not audited on a regular basis for terrorist finance vulnerabilities and does not receive adequate AML/CFT outreach or guidance from the

    authorities.

    vi) The General Director of Foundations issues licenses for charitable foundations and oversees them. However, there are a limited number of auditors to cover more than 70,000 institutions.

    vii) Turkey should insure any new legislation meets the FATF standards.[19]

     

    II. Anti-Money Laundering and Terrorist Financing

     

    A. Hierarchy of Turkey’s Law

     

    1.     Legal Basis

    Turkish laws are based on continental European Law. The first constitution was signed in 1921 which is called Teskilati Esasiye Kanunu and ratified by Turkish Grand National Assembly. It was replaced entirely by the constitution of 1924. The principal laws such as criminal law, civil law, commercial law are mostly modified versions of some European countries’ laws. The constitutional court has function of supervising the conformity of laws to the constitution. The country is based on separation of powers and the judiciary is independent. The military and civilian judiciary is separated. 

     

    2.     Executive Branch

    The executive branch is comprised of the President and the Council of Ministers. The President represents the Turkish Nation’s unity and responsible for ensuring the harmonious manner of state organs. He/she does not have to be a member of the parliament. The Council of Ministers is comprised of the ministers and headed by the prime minister. The prime minister is appointed by the President and responsible for coordination of ministers.

     

    3.     Legislative Branch

    The legislative power is vested in the Turkish Grand National Assembly. All provinces (There are 81 provinces in Turkey) are represented by deputies in the Turkish Grand National Assembly and the deputies are elected every four years. Deputies are not only responsible for their provinces, they represent the all nation. There are 550 deputies in Turkey.

     

    4.     Judicial Branch

    The judicial power is exercised by independent courts together with the supreme courts that are Constitutional Court, The Supreme Court of Appeals, the Council of State, the Supreme Military Court of Appeals, the Supreme Military Administrative Court, the Court of Jurisdictional Conflicts and the Supreme Council of Accountants. The judicial power is based on rule of law as defined in constitution. The courts are defined in three major classifications: Civil, criminal and administrative.  Considering the delays in judiciary due to work load of Supreme Court of appeals, the new courts of regional courts of justice are authorized as intermediary appeal organ for some minor cases.

     

    5.     Legislation

    All bills regarding all kind of law must be introduced into the Turkish Grand National Assembly by Council of Ministers. Each deputy has also right to introduce law proposals. The principles and procedures of the debate in Turkish Grand National Assembly are issued in Rules of Procedure. If no other provision in the Constitution, number of members of Turkey Grand National Assembly shall convene with at least one third, and shall take decisions by absolute majority, but a quorum shall not be less than one-quarter of total number of members in any way. According to the article 89 of Constitution, the President of the Republic shall promulgate the laws adopted by the Turkish Grand National Assembly within fifteen days. He/she shall, within the same period, refers to the Turkish Grand National Assembly for further consideration, laws which he/she deems wholly or in part or unsuitable for promulgation, together with a statement of his/her reasons. In the event of being deemed unsuitable by the President, the Turkish Grand National Assembly may only discuss those articles deemed to be unsuitable. Budget laws shall not be subjected to this provision. On the other hand, the Turkish Grand national Assembly may empower the Council of Ministers to issue decrees having the force of law. However, the fundamental rights, individual rights and duties, political rights and duties shall not be regulated by decrees having the force of law.

     

    6.     Regulations

    Once a bill has passed the legislative process it is published in the Official Gazette, but it may require certain actions before it can become effective, and this is when the Turkish government uses regulation in Turkey.  According to the article 124 of the Constitution, the Prime Ministry, the ministries and public corporate bodies may issue by-laws in order to ensure the application of laws and regulations relating to their particular fields of operation, provided that they are not contrary to these laws and regulations. The law shall designate which by-laws are to be published in the Official Gazette.

     

     

    B. Application of the Anti-Money Laundering Laws to Banks, Businesses and Professions

     

                1) Laws of General Applicability

     

    a) Turkish Penal Code (Law No 5237)

     

    The Turkish Penal Code is the principal document criminalizes money laundering. The Code was amended on 26 June 2009. According to the article 282 of the Code; Whoever transfers abroad the proceeds derived from an offence requiring a minimum of one year or more imprisonment or subjects the proceeds to any transaction for the purposes of disguising illicit sources of them and misleading as if they were derived from legitimate sources, is sentenced to imprisonment from 2 years up to 5 years and to judicial fine up to twenty thousand days. In case this offence is committed by public servants or particular professionals, during the execution of their professions, the sentence to imprisonment shall be increased by half of it. With regard to legal persons involved in this offence, security measures pertinent to them are taken. Before initiating the prosecution procedure, whoever enables the competent authorities to seize the proceeds subject of the offence or facilitates seizing the proceeds by informing competent authorities about where the proceeds are concealed shall not be sentenced under this Article.

     

                            c) Law on Prevention of Money Laundering (Law No 4208)

     

    The Law on Prevention of Money Laundering, dated 19 November 1996 is the first legal document that defines the “money laundering”.

               

                            d) Law on Fight Against the Terrorism (Law No 3713)

     

    The Law on Fight Against the Terrorism is to define the terror and terrorist organizations and the offenses deemed as terrorist offenses.

     

                            e) Banking Law (Law No 5411)

     

    The Banking Law as the principal for banking sector is to regulate the principles and procedures of ensuring confidence and stability in financial markets, the efficient functioning of the credit system and the protection of the rights and interests of depositors.

                            f) Law on Prevention of Laundering Proceeds of Crime (Law No 5549)

     

    18 October 2006 dated law, the Law on Prevention of Laundering Proceeds of Crime was drawn up considering the international standards in combating laundering proceeds of crime. Since implementation of essential criminal and procedure laws has been adopted in punishing and investigation of money laundering this law includes arrangements accordingly.[20]

     

                            g) Money Laundering Regulations

     

    The Regulation of Duties and Working Procedures of Financial Crimes Investigation Experts determines the assignment and professional career procedures and principles of Financial Crimes Investigation Experts of Ministry of Finance Financial Crimes Investigation Board. The Regulation of Program of Compliance with Obligations of Anti-Money Laundering and Combating the Financing of Terrorism is to regulate principles and procedures regarding establishment of compliance programs and assignment of compliance officers by obliged parties for the purpose of anti-money laundering and combating the financing of terrorism for the implementation of law no 5549.  The Regulation on Measures Regarding Prevention of Laundering Proceeds of Crime and Financing of Terrorism is to regulate principles and procedures regarding obliged parties, obligations and inspection of compliance with obligations, disclosure to customs administration and other measures for the purpose of preventing laundering proceeds of crime and financing of terrorism for the implementation of law no 5549.

     

    h) The Communiqués

     

    There are nine communiqués, eight of them relate with laundering proceeds of crime and the one relates with terrorist financing. Communiqués 1,2,3,4 are abolished.

     

    Communiqué 5 outlines the principles regarding customer due diligence are given in Chapter Three of the Regulation on Measures Regarding Prevention of Laundering Proceeds of Crime and Financing of Terrorism.[21]

     

    Communiqué 6 outlines the principles of suspicious transactions reporting.

     

    Communiqué 7 outlines the principles regarding (CDD) are specified in chapter three of “Regulation on Measures Regarding Prevention of Laundering Proceeds of Crime and Financing of Terrorism” (hereinafter refers to Regulation) published in the Official Gazette No.26751 on 09.01.2008 and entered into force on 01.04.2008.

     

    Communiqué 8 outlines the principles of suspicious transaction reporting (STR) by designated non-financial businesses and professions.

     

    Communiqué 9 outlines the principles regarding customer due diligence are given in Chapter Three of the Regulation on Measures Regarding Prevention of Laundering Proceeds of Crime and Financing of Terrorism published in the Official Gazette No. 26751 on January 9, 2008 and entered into force on April 1, 2008.

     

    C. Enforcement of the Money Laundering Laws

     

    The Financial Crimes Investigation Board (MASAK) which is a main service unit of Ministry of Finance and is directly attached to Ministry of Finance in Turkey. The mission of MASAK with regard to preventing money laundering and to detecting this offence is to make policies and to contribute making regulations, to collect information fast and reliably and to analyze them, to carry out investigation and research and, to convey the information and the results to relevant authorities.[22] 

     

     

     

    D. Elements of Money Laundering

     

    Turkey criminalizes money laundering in several different manners to reach international standards of compliance:  1) money laundering; 2) failing to notify the accused person or the evidences of the offense; 3) assisting an organized criminal group knowingly and willingly; and 4) purchase or acceptance of property acquired through committing an offense.

     

                1) Offenses

     

    a) Money Laundering

     

    A person who transfers abroad the proceeds obtained from an offence requiring a minimum penalty of six months or more imprisonment, or processes such proceeds in various ways in order to conceal the illicit source of such proceeds or to give the impression that they have been legitimately acquired shall be sentenced to imprisonment from three years up to seven years and a judicial fine up to twenty thousand days.

     

    A person who, without participating in the commitment of the offence mentioned in paragraph (1), purchases, acquires, possesses or uses the proceeds which is the subject of that offence knowing the nature of the proceeds shall be sentenced to imprisonment from two years up to five years.

     

    Where this offence is committed by a public officer or professional person in the course of his duty then the penalty to be imposed shall be increased one half.

     

    Where this offence is conducted in the course of the activities of an organization established for the purpose of committing an offence, the penalty to be imposed shall be doubled.

     

    Where a legal entity is involved in the commission of this offence it shall be subject to security measures.

     

    In relation to the offences defined in this article, no penalty shall be imposed upon a person who directly enables the securing of financial assets, or who facilitates the securing of such assets, by informing the relevant authorities of the location of such before the commencement of a prosecution.

     

                            b) Failing to Notify the Accused Person or the Evidences of the Offense

     

    Any person who fails to notify the authorized bodies about the known place of a person, against whom decision is obtained for his arrest or conviction, is sentenced to imprisonment up to one year.

     

    Any person who knowingly fails to notify the place where all the evidences or indications of offense concealed by other are punished according to the provisions of above provision.

    The punishment to be imposed is increased by one half in case of commission of this offense by a public officer while performing duty.

     

    If the accused are publicized during the investigation or prosecution stages in order to give the impression that he is the offender prior to the judgment, the persons who involve in such act is punished with imprisonment from six months to two years.[23]

     

                            c) Assisting an Organized Criminal Group Knowingly and Willingly

     

    Any person who knowingly and willingly helps an organized criminal group although not takes place within the hierarchic structure of the group, is punishes as if he is a member of the organized group.

     

    d) Purchase or Acceptance of Property Acquired Through Committing an Offense

     

    Any person who purchases or accepts the property acquired through committing an offense, is punished with imprisonment from six months to three years and punitive fine up to thousand days.

     

     

    E. Elements of Terrorist Financing

     

    Turkey criminalizes terrorist financing in article 8 of the Law on Fight Against the Terrorism.[24]

     

    Turkey criminalizes terrorist financing in two different ways as follows:

     

    i) Provides property

    ii) Collects property

     

    Any person who knowingly and willfully provide or collect property to be used for terrorist financing either in whole or in part, shall be punished as a member of the organization. Property, even if unused, the person shall be punished in the same way.

     

                1) Property

     

    The property refers to all kinds of goods that can be represented by money or value for money, rights, receivables, income, and interest, and the resulting exchange of these refers to the interest and value.

     

                2) Terror

     

    Every kind of acts which are perpetrated by any of the methods of extortion, intimidation, discouragement, menace and threat by using force and violence by a person or by persons belonging to an organization with a view to changing the nature of the Republic as defined in the Constitution and its political, legal, social, secular and economic order, impairing the indispensable integrity of the Turkish State and Republic, weakening or annihilating or overtaking the State authority, eliminating the basic rights and freedoms and damaging the internal and external safety, public order or general health of the country.[25]

     

                3) Terrorist Organization

     

    The organization referred in the present Law is assumed to have been formed when two or more persons come together for the same purpose. The term organization includes also the associations, groups, armed groups, bands and armed bands mentioned in the Turkish Penal Code and in ad hoc laws containing penal provisions.[26]

     

     

    III. Criminal and Civil Forfeiture

     

    A. Criminal Forfeiture

     

                1) Confiscation Orders for Proceeds of Unlawful Activities

     

    Turkey’s confiscation and forfeiture provisions are defined under article 54 (Confiscation of Goods) and article 55 (Confiscation of Benefits) of Turkish Penal Code. 

    Accordingly, provided not belonging to the bona fide third parties, the goods used in committing a deliberate offence or allocated for committing an offence or derived from a crime shall be confiscated. The goods prepared for using in committing an offence shall be confiscated in case of danger for public security, public health or public morality. In case of removing, transferring, consuming of the goods in the scope of above paragraph or in case confiscation of aforementioned goods is impossible in another way, an equivalent value of the goods shall be confiscated.

    If it is considered that the confiscation of the goods used in committing the offence generates more serious results in comparison to this offence and for this reason it is understood that confiscation of the goods violates equity, then the confiscation may not be ordered.

    The goods whose production, disposition, usage, transportation, purchase and sale constitutes a crime shall be confiscated.

    When a partial confiscation of any article is required, that part shall be confiscated providing that it can be separated without giving any harm to the whole of it.

    With regard to the goods belong to joint owners, only the share of the person participating the crime shall be confiscated.

     

    With regard to the confiscation of benefits; The material benefits derived from committing a crime or constitutes the subject of the crime or provided for committing the crime with the economical earnings obtained by the deposition or conversion of them shall be confiscated. In order to give the confiscation decision in accordance with this paragraph, the material benefit cannot be returned to the inflicted person.

    When the property or material benefits cannot be seized or submitted to the competent authorities, an equivalent value of these assets shall be confiscated.

     

     

                2) Restraint Orders

     

    The courts may order a restraint order to freeze the property that may be realized in order to pay a confiscation order. A restraint order may be made at any time, even before the prosecution is instituted, as long as the court is convinced that a confiscation order against the defendant is likely.

     

    B. Civil Forfeiture

     

    The civil forfeiture regime is very poor in Turkey should rely on court orders in ordinary civil cases only. The decision is either given as temporary injunction or as final decision.

     

    C. Agencies

     

    The Financial Crimes Investigation Board of Republic of Turkey Ministry of Finance (MASAK) is the national authority to develop policies and implementation strategies, to coordinate institutions and organizations, to conduct collective activities, to exchange views and information in order to prevent laundering proceeds of crime, to prepare law, by-law and regulation drafts in accordance with the policies determined, to make regulations for the implementation of relevant laws  and the decisions of Council of Ministers regarding the relevant laws, to carry out researches on the developments and trends on laundering proceeds of crime, and on the methods of detecting and preventing them, to make sectoral studies, to improve measures and to monitor the implementation on the purpose of prevention of laundering proceeds of crime, to carry out activities to raise the public awareness and support, to collect data, to receive suspicious transaction reports, to analyze and evaluate them in the scope of prevention of laundering proceeds of crime and terrorist financing, to request for examination from law enforcement and other relevant units in their fields, when required during the evaluation period, to denounce files to the Chief Public Prosecutor’s Office for the necessary legal actions according to the Criminal Procedure Law in the event of detecting serious findings at the conclusion of the examination that a money laundering offence is committed, to examine the cases conveyed from Public Prosecutors and to fulfill the requests relating to the determination of money laundering offence, to convey the cases to the competent Public Prosecutor’s Office in cases where serious suspicion exists that a money laundering or terrorist financing offence is committed, to ensure inspection of obligations within the scope of relevant laws  and relevant legislation, to request all kinds of information and documents from public institutions and organizations, natural and legal persons, and unincorporated organizations, to request temporary personnel assignment from other public institutions and organizations within the Presidency, when their knowledge and expertise is necessary, to carry out international affairs, to exchange views and information for the subjects in the sphere of its duties, to exchange information and documents with counterparts in foreign countries, to sign memorandum of understanding that is not in the nature of an international agreement for this purpose  as defined in  the law,  Law no. 4208 on Prevention of Money Laundering. MASAK has only headquarter in Ankara and no regional office.

    IV. Compliance

     

    A. Risk Management

     

    FATF recommends countries use a “risk based” approach to identify money laundering and terrorist financing.  This type of system will allow the efforts of financial institutions to be focused where it can have the greatest impact. 

     

    Financial institutions are required to carry out business risk assessment in a regular and ongoing manner.  Financial institutions must regularly review the risk assessment methods to ensure up to date methods are in place.

     

    1) Determining the Level of Risk

     

    The obliged parties as defined in the Law on Prevention of Laundering Proceeds Of Crimes means those who operate in the field of banking, insurance, individual pension, capital markets, money lending and other financial services, and postal service and  transportation, lotteries and bets; those who deal with exchange, real estate, precious stones and metals, jewelry, all kinds of transportation vehicles, construction machines, historical artifacts, art works, antiques or intermediaries in these operations; notaries, sports clubs and those operating in other fields determined by the Council of Ministers,

     

    Accordingly, in the scope of necessary measures, the Ministry has the authority to determine obliged parties and implementation principles and procedures, including measures to assign an officer with necessary authority at administrative level for ensuring compliance with this law and to establish training, internal control and risk management systems by regarding size of business and business volumes.

     

    Customer risk as defined in the money laundering regulations means the risk for obliged parties to be abused due to the business field of the customer allowing intensive cash flow, purchasing of valuable goods or international fund transfers to be carried out easily; and due to the acts of customer or those acting on behalf or for the benefit of the customer for money laundering or terrorist financing purposes.

     

    Obliged parties shall establish a risk management policy under the scope of the institutional policy considering their business size, business volume and nature of the transactions they conduct. The objective of the risk management policy is to define, grade, monitor, assess and reduce the risk possible to be exposed by the obliged parties. Activities related to risk management shall cover at least:

    a) Developing risk defining, rating, classifying and assessing methods based on customer risk, service risk and country risk,

    b) Rating and classifying services, transactions and customers depending on risks,

    c) Developing proper operational and control rules for ensuring monitoring and controlling risky customers, transactions or services; reporting in a way that warns related units; carrying out the transaction with the approval of senior management and controlling it when necessary,

    d) Questioning retrospectively the coherency and effectiveness of risk defining and assessing methods and risk rating and classifying methods depending upon sample events or previous transactions, reassessing and updating them according to achieved results and new conditions,

    e) Carrying out required development works through pursuing recommendations, principles, standards and guidelines established by national legislation and international organizations related to issues under the scope of risk,

    f) Reporting risk monitoring and assessing results regularly to the executive board

     

                            a) Customer Risk

     

    Obliged parties shall take at least the following measures for reducing the risk to be undertaken related to groups determined as risky as a result of risk rating activities:

    a) Developing procedures for ongoing monitoring of transactions and customers,

    b) Requiring approval of one level higher officer for establishing business relationship, sustaining current business relationships or carrying out transactions,

    c) Gathering as much information as possible on the purpose of the transaction and source of the asset subject to transaction,

    d) Obtaining additional information and documents under the scope of customer due diligence, and taking additional measures for verifying and certifying the information submitted.

     

                            b) Product or Service Risk

     

    The Communiqué 6 defines the procedures to determine product or service risk. However there is no certain indicator to define a customer or the transaction as suspicious for money laundering purposes. The only internal risk management system of financial institutions aims to determine the credibility and financial sustainability of the customer. It is initiative of the obliged parties to determine any transaction as suspicious which is lack of controlling mechanism. This is obviously understood from the Communique 6 prescribing that in each case where simplified measures shall be applied, obliged parties shall assess  each transaction separately whether there will be any abuse of transaction for money laundering and terrorist financing and, therefore, whether there is any risk of money laundering or terrorist financing. In the event that there is a suspicious of money laundering or terrorist financing, obliged parties shall not apply simplified measures and shall report the transaction to MASAK.

      

    c) Risk by Country

     

    Article 25 of the AML Regulation imposes financial institutions to pay special attention to business relationships and transactions with the natural and legal persons, unincorporated organizations and the citizens located in risky countries and to obtain information about the purpose and the nature of the transactions, as far as possible, which have no apparent reasonable legitimate and economic purpose and to record them. Besides, the principle of “reliance on third parties” may not be applied to cases where the third party is resident in a risky country,

     

    B. Customer ID and Customer Due Diligence

     

    1) Introduction

     

    a) Fictitious or Anonymous Accounts

     

    The obliged parties, in cases where they cannot make customer identification or obtain information on the purpose of the business relationship, shall not establish business relationship and not conduct the transaction which they are requested. In such a circumstance they cannot open an anonymous account or account in a fictitious name.
     In cases where customer identification and its verification which are required to be conducted due to suspicion on the adequacy and accuracy of the previously obtained customer identification information cannot be carried out, the business relationship shall be terminated. Obliged parties shall also assess whether the situations specified in the first and second paragraphs of this Article are suspicious transactions or not.

     

                            b) When to Conduct CDD

     

    As defined in the Guideline for the Turkish Banking System on Significance of Fight Against Laundering of Crime Revenues and Financing Terrorism[27]  in order to establish a bank-customer relationship based on trust under the policy of know-your-customer, it is important to have sufficient information on the following items:

    &smbull; Determination of the customer’s real identity and address,

    &smbull; Coherency of the customer’s documents and information,

    &smbull; The reason of the customer’s preference of the bank and the purpose of opening an account,

    &smbull; Profession, main revenue-raising activities, and professional principles of the customer,

    &smbull; Profile and capacity of the customer’s transactions,

    &smbull; Suppliers and buyers of the customer, and

    &smbull; Location of customer business office and activity.

     

    It is extremely significant that the banks instruct their employees contacting with or making offers to the customers to be careful in these issues.

     

                            c) Steps in Obtaining Customer Information

     

    The steps financial institutions must conduct for CDD are as follows:

     

               1. Procedure for customer identification and recording of the stated addresses

     

     

    a.      Information Required

     

    In customer identification of natural persons, their name, surname, place and date of birth, nationality, type and number of the identity card, address, sample of signature, and telephone number, fax number, e-mail, if any, and information on job and profession, and for Turkish citizens, as additional information, the names of mother and father and Turkish identity number shall be received. In additional to the minimum requirements shall be included in contract services between the customers and banks, only to prevent money laundering and terrorist financing purposes, it is recommended in the Guideline for the Turkish Banking System on Significance of Fight Against Laundering of Crime Revenues and Financing Terrorism to banks recommended that, based on the type of the customer and the types of the banking services to be provided, enhanced diligence should be placed on customer identification, recording of the addresses stated by the customers and determination of the other legal and individual information and documents, receipt of the documents and information, storing the records of such information and documents in physical and electronic media, and instruction of the data entries/methods.

     

    Accordingly it is recommended that the principles of the customer identification method and recording of the stated address should comprise the following:

     

    i)    Verification of the customer’s legal identity and structure, name or title, address, managers, company documents regarding the definition of authority and other related conditions binding the legal entity; by comparing such information with official records and with the information received from the customer,

    ii)  Verifying that the person maintaining that he acts in the name of the customer is authorized and determining his identity as well, and

    iii)  Carrying out the customer identification procedures in compliance with the documents and obligations defined under laws.[28]

     

    The procedures are better classified under the following groups:

     

    i) Identity determination procedure and recording of stated addresses for permanent customers,

    ii)  Identity determination procedure and recording of stated addresses for temporary customers,

    iii) Determination of the additional legal and other information and documents to be used in bank’s internal transactions other than the basic determination of the customer’s identity (tax, identity and citizenship numbers, power of attorney, contract, contact information such as telephone number, electronic mail address, and profession), and

    iv) Verification of the documents and information regarding the customer and other information and documents used during opening of the account.

      

     

    b) Verification of Information

     

    A financial institution must verify the full names, date and place of birth, mother’s and father’s name, nationality and identity number of a natural person. Name and surname, place and date of birth, mother’s and father’s name, nationality, type and number of the identity card of the person concerned shall be verified through Turkish  identity card, Turkish driving license or passport for Turkish citizens.

    Residential addresses must also be verified.  The address submitted while establishing permanent business relationship shall be verified through a certificate of residence, any utility bill drawn up within the previous three months from the date of transaction for a service requiring subscription such as electricity, water, natural gas, telephone, any document issued by a public institution or through any other documents or methods approved by MASAK. Legible photocopies or electronic image of the documents to be verified shall be received or the information specific to them shall be received.

     

     

                                        2) Foreign Nationals

               

                                                    a) Information Required

     

    An accountable institution must obtain from a natural person who is a foreign national the following information:

    Passport, certificate of residence or any type of identity card considered proper by the Ministry for non-Turkish citizens in addition to the requirements for Turkish nationals. [29]

     

     

                                                    b) Verification of Information

     

    An accountable institution must verify the particulars obtained by comparing the information with an identification document that is notarized passport copy. After originals or notarized copies of documents which are subject to verification are submitted, their legible photocopy or electronic image shall be received or information regarding the identity shall be recorded in order for submittal upon request of authorities.

     

    3) Legal Persons- Turkish Companies

     

                                                    a) Information Required

     

    In customer identification of legal persons such as companies and corporations registered to trade registry,[30]

          (a) the registered name of the legal person,

    (b) its trade registry number,

    (c)  tax identity number,

    (d) field of activity,

    (e) full address,

    (f) telephone number,

    (g) fax number and e-mail,

    (h) if any, and the name, surname, place and date of birth, nationality, type and number of the identity card, and a sample signature of the person authorized to represent the legal person and for Turkish citizens, as additional information, the names of mother and father and Turkish identity number shall be received.

                                                   

    b) Verification of Information

     

    In verification of information provided from legal persons such as companies and corporations registered to trade registry, the title of the legal person, its trade registry number, field of activity, full address shall be verified through documents of registration to the trade registry; its tax identity number shall be verified through documents drawn up by the related unit of Revenue Administration.
     Identification information of persons authorized to represent the legal person shall be verified through identity cards stipulated in above; and their authority to represent shall be verified through documents of registration.
    After originals or notarized copies of documents which are subject to verification are submitted, their legible photocopy or electronic image shall be received or information regarding the identity shall be recorded in order for submittal upon request of authorities.
     In establishing permanent business relationship, financial institutions shall verify through consulting records kept by the related trade registry office or the database of Turkish Union of Chambers and Commodity Exchanges whether the information given in registration documents submitted to them are up-to-date and correct.

    In case of a request of transaction, within the scope of an existing permanent business relationship, on behalf of the legal person by a written instruction of the person authorized to represent the legal person the authenticity of the identification information of the person authorized to represent the company may be verified through a notarized signature circular comprising the information in identity cards provided that there is no doubt that the instruction is from the representative of the company[31]

     

                            4) Legal Persons: Foreign Companies

     

                                                    a) Information Required

     

    The customer identification of non-resident legal persons shall be made through notarized Turkish translations of copies of the documents approved by the consulates of the Republic of Turkey corresponding to the documents in related country required for legal persons residing in Turkey and or through notarized Turkish translations of copies of the documents attached apostille by an authority of the country which is a party to the “Convention on Abolishing the Requirement of Legislation for Foreign Public Documents”.

     

     

                                                    b) Verification of Information

     

    The title of the legal person, its trade registry number, field of activity, full address shall be verified through documents of registration to the trade registry; its tax identity number shall be verified through documents drawn up by the related unit of Revenue Administration.
    Identification information of persons authorized to represent the legal person shall be verified through notarized Turkish translations of copies of the documents attached apostille by an authority of the country which is a party to the “Convention on Abolishing the Requirement of Legislation for Foreign Public Documents”.
    After originals or notarized copies of documents which are subject to verification are submitted, their legible photocopy or electronic image shall be received or information regarding the identity shall be recorded in order for submittal upon request of authorities.
     In establishing permanent business relationship, financial institutions shall verify through consulting records kept by the related trade registry office or the database of Turkish Union of Chambers and Commodity Exchanges whether the information given in registration documents submitted to them are up-to-date and correct.

    In case of a request of transaction, within the scope of an existing permanent business relationship, on behalf of the legal person by a written instruction of the person authorized to represent the legal person the authenticity of the identification information of the person authorized to represent the company may be verified through a notarized signature circular comprising the information in identity cards provided that there is no doubt that the instruction is from the representative of the company.[32]

     

                                        5) Legal Persons:  Other Legal Persons

     

                                                    a) Information Required

     

    An accountable institution must obtain from a legal person that is an association

    (a) the name of the association,

    (b)   its aim,

    (c) log number,

    (d)  full address,

    (e)  telephone number,

    (f)  fax number and e-mail, if any,

    (g) the name, surname, place and date of birth, nationality, type and number of the identity card and sample signature,

    (h)  and for Turkish citizens, as additional information, the names of mother and father and Turkish identity number of the person authorized to represent the association shall be received.

     

    An accountable institution must obtain from a legal person that is a foundation

    (a)   its aim,

    (b)  central registry record number,

    (c)   full address,

    (d)  telephone number,

    (e)   fax number and e-mail address,

    (f)    if any, and the name, surname, place and date of birth, names of mother and father, nationality, type and number of the identity card and sample signature of the person authorized to represent the foundation and for Turkish citizens the additional information as the names of mother and father and Turkish identity number shall be received.

     

    An accountable institution must obtain from a legal person that is a trade union and/or confederation

    (a) the name of the organization,

    (b)   its aim,

    (c)   registry number,

    (d)   full address,

    (e)    telephone number,

    (f)   fax number and e-mail,

    (g)   if any, and the name, surname, place and date of birth, nationality, type and number of the identity card of the person and sample signature of the person authorized to represent the trade unions and confederations and for Turkish citizens the additional information as the names of mother and father and Turkish identity number shall be received.

     

    An accountable institution must obtain from a legal person that is a political party;

         (a)  the name of the relevant unit of the political party,

         (b)  its full address,

         (c)  telephone number,

         (d) fax number and e-mail address,

    (e) if any, and name, last name, place and date of birth, nationality, type and number of the identity card and sample signature of the person authorized to represent and for Turkish citizens the additional information as the names of mother and father and Turkish identity number shall be received. 

     

    An accountable institution must obtain from a legal person that is an unincorporated organization (Such as building, housing estate or office site management)

    (a) the name of the organization,

    (b)  its full address,

    (c)  telephone number,

    (d)  fax number and e-mail address,

    (e)  if any, and name, last name, place and date of birth, nationality, type and number of the identity document and sample signature of the person authorized to represent the organization and for Turkish citizens the additional information as the names of mother and father and T.R. identity number shall be received. 

     

    An accountable institution must obtain from a legal person that is an unincorporated organization (Such as unincorporated joint venture)

          (a)  the name of the joint venture,

          (b) its aim,

          (c)  its full address,

          (d) telephone number,

          (e) fax number and e-mail address,

          (f) if any, and name, last name, place and date of birth, nationality, type and number of the identity document and sample signature of the person authorized to represent the organization and for Turkish citizens the additional information as the names of mother and father and Turkish identity number shall be received.[33] 

     

     

                                                    b) Verification of Information

     

    An accountable institution must verify the information in respect of associations;

     

    The name, aim, log number and full address of the association shall be verified through the charter of the association and documents of registry in the associations’ log; the identification information of the person authorized to represent the association shall be verified through identity cards stipulated above; and the authority to represent shall be verified through documents of authorization to represent.

     

    An accountable institution must verify the information in respect of foundations;

    Name, central registry record number, full address of the foundation shall be verified through foundation deed and records kept by the General Directorate of Foundations; the identity information of the person authorized to represent the foundation shall be verified through identity cards stipulated above; and the authority to represent shall be verified through documents of authorization to represent.
    After originals or notarized copies of documents which are subject to verification are submitted, their legible photocopy or electronic image shall be received or information regarding the identity shall be recorded in order for submittal upon request of authorities.

    Customer identification for branches and representatives of foreign associations and foundations in Turkey shall be conducted depending on registry documents in the Ministry of Interior.

     

    An accountable institution must verify the information in respect of trade unions and confederations;

    The information gathered shall be verified through charter of these organizations and the records kept by local directorates of Ministry of Labor and Social Security; the identity information of the person authorized to represent the organization shall be verified through identity cards stipulated above; and the authority to represent shall be verified through documents of registration or documents of authorization to represent.

    After originals or notarized copies of documents which are subject to verification are submitted, their legible photocopy or electronic image shall be received or information regarding the identity shall be recorded in order for submittal upon request of authorities.

     

    An accountable institution must verify the information in respect of political parties;

    The name and address of the relevant unit of the political party shall be verified through their charter identity of the person authorized to represent shall be verified through the identity documents stipulated above, the authority to represent shall be verified through documents of authorization to represent.
    After the originals or notarized copies of documents which are subject to verification are submitted, their legible photocopy or electronic image shall be received or information regarding the identity shall be recorded in order for submittal upon request of authorities.

     

    An accountable institution must verify the information in respect of an unincorporated organization (Such as building, housing estate or office site management);

    The identity information of the person authorized to represent the organization shall be verified through the identity documents stipulated above, and the organization information and the authorization of the person acting on behalf of the organization shall be verified through notarized docket.

     

    An accountable institution must verify the information in respect of an unincorporated organization (Such as unincorporated joint venture);

    Information indicating the name, aim, activity field and the address of the partnership shall be verified through notarized partnership agreement, tax identification number shall be verified through the certificates drawn up by the relevant unit of Revenue Administration, identity of persons requesting transaction on behalf of the joint venture shall be verified through identity documents stipulated above authorization shall be verified through the documents indicating the authority to represent.
    After the originals or notarized copies of documents which are subject to verification are submitted, their legible photocopy or electronic image shall be received or information regarding the identity shall be recorded in order for submittal upon request of authorities.
    [34]

     

     

                                        6) Partnerships

     

                                                    a) Information Required

     

    Since the partnership in Turkish law has legal personality, the information required for the partnerships are same with the information required for legal person. Every member of a partnership whom is an individual provides the information which is required for individuals and representatives of a partnership as stipulated above.

     

                                                    b) Verification of Information

     

    An accountable institution must verify the information in respect of a partnership as same with the verification for legal persons for the partnership itself and individuals for the representative or member of partnership.

     

                                        7) Trusts

     

    a) Information Required

     

    Trusts do not exist under Turkish law.

     

                                                    b) Verification of Information

     

    Trusts do not exist under Turkish law.

     

                                                    c) Non Face-to-Face Individuals

     

    Article 2.1, paragraph 4 of the Communiqué No. 5 imposes financial institutions to take necessary measures including use of secure networks, and use of passwords to make customer identification and determine and verify the authority of the person requesting transaction or giving instructions for it in non-face-to-face electronic transactions.

     

                2) Simplified Due Diligence (SDD)

     

    With respect to the SDD regime of the Turkey the Ministry of Finance may allow obliged parties to take more simplified measures in terms of customer due diligence in the following situations;

    (a)  In transactions carried out between financial institutions on behalf of themselves,
    (b) In transactions where the customer is a public administration or quasi public professional organization in the scope of general administration in accordance with the Public Financial Management and Control Law No. 5018,
    c) In establishing a business relationship within the scope of salary payment by accepting a batch of customers,
    (d) In transactions related to pension schemes that provide retirement benefits to employees by way of deduction from their salaries and of pension agreements,
     
    (e) In transactions where the customer is a public company and its shares are listed on the stock exchange.

    The Ministry of Finance is authorized to determine applicable measures and the transaction types apart from the ones listed above.

    Obliged parties may not apply simplified measures in cases where money laundering or terrorist financing risks might occur due to the transaction and shall take into account that the transaction is possibly a suspicious transaction.[35]

                            a) Publicly listed companies

     

    Reduced CDD may be applied in transactions where the customer is a public company and its shares are listed on the stock exchange.

     

                            b) Non-Controlled Clients

     

    Article 2.2.1, of the Communiqué No. 5 prescribes that in transactions carried out between financial institutions themselves defined in subparagraph (f) of paragraph 1 in Article 3 of the AML Regulation, the information in paragraph 1 of Article 7 of the AML Regulation shall be received and recorded regarding the financial institution which is the customer. Verification of this information under mentioned article of the AML Regulation is not compulsory.

    Accordingly,  the institutions other than banks who have the authority to issue bank cards or credit cards, authorized exchange offices given in legislation on foreign exchange, money lenders, financing and factoring companies within the scope of legislation on money lending, Capital Markets Brokerage Houses, Futures Brokerages and portfolio management companies, investment fund managers, investment partnerships, insurance, reinsurance and pension companies, and insurance and reinsurance brokers, financial leasing companies, institutions furnishing settlement and custody services within the framework of capital markets legislation are deemed as financial institution and these client’s are  not subject to the provisions relating to the customer identification of legal persons registered to trade registry as referred in the AML Regulation above

    Regarding customers within this scope, it is not mandatory to apply the obligations of identifying the beneficial owners and paying special attention to legal persons and monitoring customer profile and transactions.

     

                            c)  Full Exemption from CDD

     

    Turkey allows several full exemptions from all CDD requirements, which is not in compliance with FATF Recommendations. According to the article 2 of AML Law, other obliged parties are limited with  those who operate in the field of banking, insurance, individual pension, capital markets, money lending and other financial services, and postal service and transportation, lotteries and bets; those who deal with exchange, real estate, precious stones and metals, jewelry, all kinds of transportation vehicles, construction machines, historical artifacts, art works, antiques or intermediaries in these operations; notaries, sports clubs and those operating in other fields determined by the Council of Ministers. Accordingly the public administration, state economic enterprise or a quasi public institution or a bank and shareholders of these institutions are exempted from CDD. Moreover, in periodically reporting to MASAK by obliged parties the transactions carried out by and between banks on behalf of themselves and for their own benefit and the transactions conducted between financial institutions and the administrations under general administration, public economic enterprises, quasi-public professional organizations in accordance with the Law No.5018 are not within the scope of obligation for periodically reporting.

     

                                        1) Public Administrations&Public Institutions&Public Banks in Turkey

     

    Public Administrations, public institutions and the public banks are not counted as the obliged parties to conduct CDD in Turkey that is criticized in FATF report of 23 February 2007.[36]

     

                                        2) Certain Banks

     

    Banks are exempt from conducting CDD when there is an unsecured loan not exceeding TRY 2,000 which is made to a customer with whom the bank has a business relationship. 

     

     

                                        3) Exemption

     

    Insurance agents and freelance lawyers except the lawyers pertaining only to functions within the scope of paragraph 2 in Article 35 of Law No. 1136 on lawyers such as trading of immovables, establishing, managing and transferring companies, foundations and associations provided that these functions are not contrary, in terms of right of defending, exempt from conducting CDD in relation to certain products.

     

                                        4) Securities Market Participants

     

    Securities market participants that are accountable institutions are counted as obliged parties in Turkey.

     

    3) Enhanced Due Diligence (EDD)

     

    EDD only exist in circumstances that defined pursuant to the article 18 of the Regulation Regarding Implementation of the Law 4208 as, the obliged parties shall be required to pay special attention to complex and unusual large transactions and the ones which have no apparent reasonable legitimate and economic purpose, to take necessary measures in order to obtain adequate information on the purpose of the requested transaction, and to keep the information, documents and records obtained in this scope in order for submittal upon request of authorities.

     

                4) Failure to Complete CDD

     

    According to the article 13 of the AML the obliged parties violating CDD obligation shall be punished with administrative fine of five thousand Turkish Liras by the Presidency. If the obliged party is a bank, finance company, factoring company, money lender, financial leasing company, insurance and reinsurance company, pension company, capital market institution or bureau de change, administrative fine shall be applied two-fold. In case of violation of the CDD obligations stated in, the employee who does not fulfill the obligation shall be punished with administrative fine of two thousand Turkish Liras as well. Administrative fine may not be imposed after five years from the date of violation of obligation.  Other principles and procedures regarding this article are determined by the regulation to be issued by the Ministry.

     

    5) Wire Transfers

     

    Turkey does not have a payment system law. The Central Bank functions to set up the standards of payment (CBS) systems in Turkey. The applicable wire transfers are as follows: electronic funds transfer (“EFT”), electronic transfer of securities, ordinary remittance, check clearing.  

     

    Pursuant to the article 24 of the  Regulation Regarding Implementation of the Law 4208  it is required that the following information of the originator is included in the cross border and domestic wire transfer messages which amount to two thousand TRY or more;
                a) Name and surname, title of the legal person registered to trade registry, full name of the other legal persons and unincorporated organizations;
                b) Account number or reference number of the transaction where no account number exists;
                c) At least one of the address or place and date of birth or the numbers such as TR-ID number, passport number, tax ID number for identifying the originator;

    The transfers carried out between the banks on behalf of themselves or for their own benefit and the transfers carried out by using credit or bank cards provided that card numbers are included in the messages shall be out of the scope of paragraph (2) above;

    In the event that financial institution receives a wire transfer message not including the information specified in paragraph (2), either it shall return the said wire transfer message or it shall complete short-coming information through the financial institution who sent the message.

    In the event that the messages sent include short-coming information permanently and they may not be completed although they are requested, either the wire transfers received from originator financial institution may be refused or transactions carried out with related financial institution may be restricted or business relationship with related financial institution may be ceased.

     

                            a) Information that must Accompany Wire Transfers

     

                                        1) Transfers through the CBS

     

    Wire transfers through banks may only be conducted by 48 banks that are permitted to conduct wire transfers.  There is no minimum value for wire transfers set by the Central Bank.

    Banks are required to complete certain message fields in the SWIFT message when processing payment instructions.  For normal customer-to-customer transactions, the originator’s account number, name and address (or Business Entity Identifier), commission fee, if any, must be entered.

     

                                        2) Transfers through Postbank

     

    Turkish citizens also have access to money/postal orders provided by postbank (PTT). Transfers through PTT to a bank account are limited depending on the mutual agreements with relevant banks and PTT.

     

                            b) Batch Files

     

    Payments processed through the EFT for domestic transfers are batched.  Batch files from a single payer to multiple payees must carry the same information as required above. 

     

    C. Politically Exposed Persons (PEPs)

     

    There are no requirements in Turkish law in relation to screening PEPs.

     

     

    D. Currency Transaction Reporting

     

                1) Customs

     

    There are 24 airports in Turkey that are designated as points of entry for the movement of goods and people.  There are 147 land border posts. These land borders are all rated from A to B, based on the level of service provided at the border post.  An ‘A’ border post conducts every kind of customs transactions. At the ‘B’ border posts the movement of people and goods together with them are controlled. Passengers who carry to or from abroad Turkish currency, foreign currency or instruments ensuring payment by them shall disclose them fully and accurately upon the request of Customs Administration.  The bonds, policies and cheques, traveler’s cheques, postal cheques, instruments in the nature of payment order given by the organizations located at home and abroad are considered as documents ensuring payment in Turkish currency or foreign currency. The fact that this sort of document containing an amount has deficiencies such as date, beneficiary, signature, address and suchlike facts shall not remove responsibility of disclosure. The personnel of Customs Administration charged at customs gate is authorized to request disclosure from passengers. The values held by the passenger shall be determined by the authorized personnel of Customs Administration regardless of the fact that whether any disclosure has been made or not. The reporting obligation shall not remove the reporting obligation established by the legislation regarding the protection of the value of the Turkish Currency.

     

                2) Incoming Persons

     

    Any person who enters Turkey is required to declare all goods on his person or in his possession which are prohibited under any law or required to be declared before leaving Turkey. A person entering Turkey shall not declare the amount she/he possess valued less than EUR 430. Following goods are exempted to be declared:

     

    i) Clothes possessed for personal use.

    ii) Electronic devices (limited)

    iii) Musical Instrument (maximum 3)

    iv)  Sporting and gaming devices (limited)

    v) Health tools (limited)

    vi)  Personal Consumption (limited)

     

                3) Outgoing Persons

     

    Anyone leaving Turkey is required to declare goods which are going to be transported beyond the borders of Turkey. The export of domestic currency exceeding USD 5,000 or the equivalence shall be declared.  

     

                4) Transportations through Cargo

     

    Goods imported into Turkey are subject to custom duties that shall be calculated on Custom Tariff.

     

     

                5) Transportation through Mail

     

    Cash and bearer negotiable instrument may not be sent through the mail.

     

                6) Powers to Stop and Restrain for further Information

     

    Customs officers have the authority to stop, detain and examine any goods under customs control. Grounds for detention include the following:  suspicion that a false declaration or no declaration has been made, the goods are related to money laundering or terrorist financing, or there is a violation of relevant laws.

     

                7) Penalties for Noncompliance

     

    Making a false declaration or filing false documents is punishable by fines of up to 10,000 days, and to imprisonment for one to five years.

     

    E. Suspicious Activity Reporting (SAR)

     

    Pursuant to the article 27 of the Regulation Regarding Implementation of the Law 4208 suspicious transaction is the case where there is any information, suspicion or reasonable grounds to suspect that the asset, which is subject to the transactions carried out or attempted to be carried out within or through the obliged parties, has been acquired through illegal ways or used for illegal purposes and is used, in this scope, for terrorist activities or by terrorist organizations, terrorists or those who finance terrorism. When necessary, multiple transactions shall be taken into consideration together in order to determine whether there is suspicion or a reasonable ground to suspect. The fact that suspicious transactions have been reported within the scope of ongoing reporting does not remove the obligation of reporting suspicious transactions. MASAK is authorized to determine suspicious transaction types.[37]     

     

    1) Who Reports

     

    Suspicious transactions shall be reported to MASAK by obliged parties as defined above regardless of the amounts. Suspicious transaction reporting is carried out personally by natural person who is an obliged party, by legal representatives of legal person who is an obliged party, by managers of unincorporated organizations or those who are authorized by them and compliance officers where an obliged party assigns a compliance officer.

     

                2) When to File a Report

     

    When obliged parties encounter a suspicious transaction, they shall report it to MASAK by filling in a Suspicious Transaction Reporting Form taking into account the information and the findings obtained from an inquiry that they carried out, if necessary, to the extent of their authority and capability.

    In the event that new information and findings in relation to the reported transaction are obtained afterwards, another Suspicious Transaction Reporting Form shall be filled and sent to MASAK without delay by addressing that it is an additional report to the previous one.
    The Ministry is authorized to determine, separately for each obliged party, principles and procedures of filling Suspicious Transaction Reporting Forms, making it obligatory to report by using electronic and IT means, and using electronic signature in suspicious transaction reports.
    MASAK may prepare guidelines for submitting reports electronically and the guidelines might be published electronically. Reports shall be made in accordance with these guidelines.

                            a) Nature of a suspicion

     

    Even there is definition of nature of a suspicion it shall be deemed to existing if it is based on adequate grounds that the laundering crime has been or may have been committed.

     

                            b) Suspicious Indicators

    A concept of suspicious transactions is often featured in the unusual business reflected in normal course of activities carried out in unusual transactions in accounts.

     

                                        i) Unusual Business

     

    Examples of suspicious factors in unusual business are as follows:

     

    i) Transactions do not appear to be in keeping with normal industry practices;

    ii)  Unusual payment systems for the business.

    iii) Unnecessarily complex transactions;

     

                                        ii) Knowledge of Reporting or Record Keeping Requirements

     

    Examples of suspicious factors in regards to knowledge of reporting or record keeping requirements include the following:

     

    i) Insufficient, inconsistent, missing information or document

    ii) Finding other indicators leading to suspect

    tiii) Inconsistency between the employee and the employing obliged party  

     

                                        iii) Identification

     

    Examples of suspicious factors in regards to identification include:

     

    i)  Opening accounts using false or fictitious documents;

    iii) Providing different addresses and communication information;

    iv)  Insufficient company information of corporate clients of the banks

     

                                        iv) General

     

    Examples of suspicious factors in regards to general situations include the following[38]:

     

    i) The customer trying to gather information and asking questions before carrying out a transaction to learn about customer identification and suspicious transaction reporting obligations, transaction limits, control methods of the bank for combating money laundering.

    ii) Having difficulties in receiving information from the customer about his/her activity, profession, or personal information such as identity, address, telephone.

    iii) The customer having difficulty in explaining the aim of the transaction or the source of the fund subject to transaction, or abstaining from giving information.

    iv) The customer attempting to open an account suspected to be counterfeit-fictitious, make transaction or have somebody make transaction on behalf of others or through accounts without submitting ID- Card or acceptable ID- Card.

    v) The banknotes brought by customers; being small denominated and dirty, existence of stains demonstrating that it has been carried concealing in various elements and giving off smell, packaged carelessly and precipitately, lacking or exceeding substantially than the declaration of customer when counted, coming across with counterfeit banknotes in the bankroll.

    vi) Transferring of money deposited to account abroad or domestic in pieces without making a reasonable statement or failing to act of the account a long time after such transactions carried out for a certain period.

    vii) Withdrawal of money continuously in cash which was came to the account opened as understood for only drawing of money transferred from abroad or failing to act of the account a long time after such transactions carried out for a short period

    viii) Deposit or withdrawal of cash in large amounts to the accounts opened on behalf of enterprise, knowing that it was carried out without commercial motive, by the persons who do not have an apparent connection with commercial enterprise.

    ix) Customer’s investment or withdrawal of cash frequently in substantial amounts to the account in the same bank without taking into account the risks (except the reasonable factors) such as life safety, theft and abuse which can rise as a result of transportation of cash money.

    x) Opening accounts with large amounts of cash by persons and institutions who do not have apparent economical reasons regarding the purpose of opening account and there is no enough information about them.

    xi) Making transfers in remarkable amounts at one go from or to risky countries or off-shores without making any reasonable explanation or frequent and low amounts of transfers which may reach significant amounts in a specific period.

    xii) Returning the incoming funds transferred from abroad to the accounts or the names of the customers with registered addresses inside or outside the country back to abroad after a short period of time, or the customer requesting from the bank clerk to transfer the amounts to abroad that he/she expects to be transferred from abroad but not entered into his/her accounts yet; similar amounts of funds entering into and exiting the country on close dates through such accounts used as transitory accounts.

    xiii) The customer gives a check (high amounted and drawn on a foreign bank) as a guarantee to the bank which gave credit, containing contradictory information regarding the commercial activity where it was originated, not having a supportive document, not pertaining to a drawer and endorsers who can be correlated commercially, and who are associated with risky regions and countries about fraud and smuggling.

     

                3) Internal Procedures

     

    Financial institutions must establish policies and procedures to ensure compliance with reporting requirements. 

     

    a. Time Period for Reporting a Suspicious Transaction

     

    A reporting of suspicious activities must be done as soon as possible once a person has become aware of the facts which give rise to the suspicion, but may not be longer than ten days. After the facts are gathered and suspicion is formed, a report must be filed immediately.[39] 

     

    4) Procedures for Reporting to the Financial Intelligence Centre

     

                            a) Where to Report Suspicions

     

    A disclosure must be made to the MASAK, the Financial Intelligence Unit of Turkey when there is a suspicion of money laundering or terrorist financing.  A report must be made by means of STR Form based reporting provided by the MASAK. The Ministry is authorized to determine, separately for each obliged party, principles and procedures of filling STR Forms, making it obligatory to report by using electronic and IT means, and using electronic signature in suspicious transaction reports. MASAK may prepare guidelines for submitting reports electronically and the guidelines might be published electronically. Reports shall be made in accordance with these guidelines.[40]

     

                            b) How to File the STR

     

    To file a STR Form an obliged party shall provide the required information on the form.  The completed STR Form shall be sent to MASAK by hand or registered post to the address “Mali Suçlari Arastirma Kurulu Baskanliǧi, Maliye Bakanliǧi, N Blok, Dikmen Cad., 06100 Dikmen/ANKARA” or to the fax number (0 312) 415 25 35 or 415 25 36. The original STR Form which has been sent to MASAK through fax machine shall also be delivered to MASAK by hand or by registered post.

    The obliged parties who submit STR Forms shall be informed by MASAK that the STR has been recorded.

    Through Article 28 of the Regulation on Measures Regarding Prevention of Laundering Proceeds of Crime and Financing of Terrorism the Ministry of Finance has been authorized to determine, separately for each obliged party, principles and procedures of making it obligatory to report suspicious transactions by using electronic and IT means, and using electronic signature in suspicious transaction reports.

    In accordance with the same article, MASAK may prepare guidelines for submitting reports electronically and the guidelines might be published in electronic form. Based on mentioned arrangements, it has been approved that STRs from banks (excluding Central Bank of the Republic of Turkey, development and investment banks) shall be initially submitted by compliance officers through using electronic means or IT tools. The compliance officers of banks shall be defined as users of the system to be developed by MASAK, and they shall be given user names and passwords. Thus, they shall submit STRs by using directly web application screens provided for them by MASAK or through an electronic safe box ensuring a safe and specific electronic information exchange between MASAK and obliged parties through data processing system of MASAK.

    Obliged parties shall be obliged to take required measures for ensuring that these access systems which allow electronic submission of suspicious transaction reports operate efficiently and safely within themselves.

    Obliged parties shall be informed by MASAK through implementation guidelines about how to install and use the system allowing suspicious transaction reports to be submitted in electronic form; standards of the application; the suspicious transaction reporting form to be used; how to fill in the form and send it to MASAK; other documents to be sent with the form electronically; use of electronic signature.; and when the application will start to be used.

    In the event that MASAK makes any amendment in the principles and procedures determined in the implementation guidelines regarding electronic reporting of suspicious transactions, the obliged parties shall be informed of these amendments and suspicious transactions shall be reported within the framework of new principles and procedures.[41]

     

     

                            c) Information to Provide in a STR

     

    Pursuant to the article 5.2.1 of the General Communique No:6; The obliged parties that will report suspicious transactions shall fill in the below Suspicious Transaction Report Form. When the reported transaction is composed of more than one transaction or related to more than one account, it is possible to use the required fields of the form by multiplying them. MASAK is authorized to make amendments in the structure and contents of the STR Form.

    The chapters (A) to (G) in the form shall be filled in considering the clarifications on the form.

    The suspicious transaction types have been categorized under titles in chapter (H) of the form. The suspicious transaction type corresponding with the subject of the report shall be specified in this chapter.

    First, the box in front of the option related to the group to which the reported transaction belongs shall be marked with an (X).Then, the number of suspicious transaction type given in the Annex 1 below of the Communique shall be written down in the box left for the “Suspicious Transaction Type Number.”

    For example, in case that a customer appearing not to aim gaining profit through transactions and care the risks and costs pertaining to his/her transactions gives unreasonable and remarkable orders mostly resulting in loss and carries out such transactions, the option of “Types Related to Capital Markets” shall be marked in chapter H of the STR Form. And the number which corresponds to the mentioned suspicious transaction type, which is “5.1”, shall be written down in the box for “Suspicious Transaction Type Number”.

    It is possible that a transaction carried out within an obliged party is related to (general, sectoral or related with terrorist financing) types listed under different chapters. In that case more than one suspicious transaction type may be marked according to the relation of the transaction and the required explanations shall be made in the “EXPLANATIONS” part.

    If a transaction which is suspected to be related to terrorist financing corresponds clearly to types listed under the chapter “Suspicious Transaction Types Related to Terrorist Financing”, then this type is marked while filling in the form. However, on the other hand, if the requested transaction is listed among general or sectoral suspicious transaction types, but it is particularly suspected to be related to terrorist financing, then the related suspicious transaction type shall be marked and this situation shall particularly be explained in the “EXPLANATION” part.

    If the suspicious transaction does not correspond with any of the types listed in three chapters, then the suspicion and the information about the nature of the transaction shall be written in the “EXPLANATION” part.

    ANNEX 1:

    SUSPICIOUS TRANSACTION TYPES

    GENERAL TYPES OF SUSPICIOUS TRANSACTIONS

    1. Types Related to Customer Profile

    1.1. Inadequate information in the documents required to be presented or submitted by customers, inconsistent information or reluctance to give information while applying to the obliged parties.

    1.2. A concrete reason to suspect such as negative news in the media about the customer on laundering proceeds of crime or financing of terrorism, or offering money or gifts for the transaction to be carried out.

    1.3. Showing different customer attitude other than general customer attitude models, for example: behaving too friendly or having threatening attitude in order to prevent suspicious transaction reporting about them.

    1.4. An unreasonable proportion between job/profession, financial profile and transactions of the customers.

    1.5. Commercial or any other type of relationship of customers with risky persons or institutions.

    1.6. Unusual capital, partnership, management or employment structure of companies compared to other institutions in the same sector or general company structures.

    2. Types Related to Transactions

    2.1. Single transactions of persons or institutions carrying out commercial activities which should normally be repeated within the scope of those commercial activities, or repeating transactions that are normally not conducted constantly in the ordinary commercial world.

    2.2. Carrying out financial transactions, which are required to be conducted as one single transaction in usual cases, by dividing the amounts in smaller pieces without a reasonable ground in order to abstain from customer identification and reportings.

    2.3. No usual and reasonable legal or economic ground or reason in conducted or requested transactions.

    2.4. Customer using means of payment unusually such as by making too many cash payments with small denominations or making payments in a foreign exchange used infrequently.

    SECTORAL TYPES OF SUSPICIOUS TRANSACTIONS

    3. Types Related to Banking Sector

    Indicators Related to Suspicious Behaviors of Customers and Submission of Inadequate- Misleading-False Information and Documents

    3.1. The customer trying to gather information and asking questions before carrying out a transaction to learn about customer identification and suspicious transaction reporting obligations, transaction limits, control methods of the bank for combating money laundering.

    3.2. Having difficulties in receiving information from the customer about his/her activity, profession, or personal information such as identity, address, telephone.

    3.3. The customer having difficulty in explaining the aim of the transaction or the source of the fund subject to transaction, or abstaining from giving information.

    3.4. The customer trying to persuade the bank clerk to allow him/her not to submit or fill in a document which is legally or administratively required to be submitted or filled in.

    3.5. The customer demanding to open accounts in the name of numerous people residing in Turkey or abroad, or depositing or withdrawing constantly cash to/from accounts opened in the name of third parties without a reasonable and acceptable reason.

    3.6. The account holders having insufficient information about the amount deposited to their accounts or the amount in their accounts.

    3.7. The customers, apparently acting independently, giving the same address, telephone or similar contact information, sending remittances to the same beneficiary or receiving remittances from the same originators, or giving the signing authority to same person or persons in the accounts they open.

    3.8. The customer hiring a joint safe box with people who are not family members, relatives or business partners or giving them power of attorney to use these safe boxes; an excessively intensive use of safe boxes indicating that they are used as money safe boxes by several persons; intensive use of safe boxes by customers who do not have considerable account relationships or transaction volumes; safe boxes hired in the name of different persons short before or after considerable transactions; commercial institutions hiring safe boxes although their business field does not require doing so.

    3.9. Remarkable and intensive cash transaction or electronic transfer traffic directed from Turkey or abroad conflicting with safe deposit profile in accounts of persons who opened joint time deposit account although they do not have any family or business relationship.

    3.10. Understanding that the natural or legal persons who are apparently partners or managers of legal person customers are not real partners or managers of the company; Knowing or having a reasonable ground to suspect that the capital and administration of the company is held by third persons who have bad reputation or against whom a case was filed or an investigation is run by official administrations.

    3.11. The new reigning partner and/or partners of the legal person customers abstaining from giving information about their personal and commercial backgrounds; having indications that they did not have any interest, education and experience in the field in which the company operates.

    Indicators Related To Evading Procedures of Customer Identification, Record Keeping and Reporting

    3.12. The customer attempting to open an account suspected to be counterfeit-fictitious, make transaction or have somebody make transaction on behalf of others or through accounts without submitting ID- Card or acceptable ID- Card.

    3.13. Making an offer, threatening and putting pressure on the staff of obliged party by the customer in order not to report suspicious transaction.

    3.14. The customer attempting to carry out transaction under a certain threshold for the purpose of abstaining from reporting procedures, division of the money, subject to the transaction attempted, into more than one transaction, account, remittance or cash transaction.

    3.15. Existence of many accounts of a customer within various branches of the same bank with which similar transactions were carried out on behalf of himself/herself or third parties on behalf of whom he/she acted or understanding from account movements that similar accounts have also been opened in the other banks.

    3.16. Making payments to the same account by a large number of persons without explaining reasonable statement or transferring money to the same account from many different accounts.

    Indicators Related To Transactions in Cash Character

    3.17. The banknotes brought by customers; being small denominated and dirty, existence of stains demonstrating that it has been carried concealing in various elements and giving off smell, packaged carelessly and precipitately, lacking or exceeding substantially than the declaration of customer when counted, coming across with counterfeit banknotes in the bankroll.

    3.18. In the accounts of customer; observing cash withdrawals or deposit transactions (frequently in small amounts or in high amount for one time) in remarkable amounts which cannot be associated with the life standard, job and income level.

    3.19. Transferring of money deposited to account abroad or domestic in pieces without making a reasonable statement or failing to act of the account a long time after such transactions carried out for a certain period.

    3.20. Withdrawal of money continuously in cash which was came to the account opened as understood for only drawing of money transferred from abroad or failing to act of the account a long time after such transactions carried out for a short period.

    3.21. Withdrawal of transfers, came to the low remaining inactive accounts of customer exist in more than one branch of the same bank, generally by maximum cash advance operation from ATMs.

    3.22. Deposit or withdrawal of cash in large amounts to the accounts opened on behalf of enterprise, knowing that it was carried out without commercial motive, by the persons who do not have an apparent connection with commercial enterprise.

    3.23. Customer’s investment or withdrawal of cash frequently in substantial amounts to the account in the same bank without taking into account the risks (except the reasonable factors) such as life safety, theft and abuse which can rise as a result of transportation of cash money.

    3.24. Opening accounts with large amounts of cash by persons and institutions who do not have apparent economical reasons regarding the purpose of opening account and there is no enough information about them.

    3.25. Customer’s request of arranging monetary instruments such as blocked cheques, letter of guarantee or payment orders by having held cash amounts in a bank frequently which are not related or which cannot be associated with his business.

    3.26. Fragmentary deposit of cash to the same account by the same persons via different branches or by the persons who come to the bank at the same time.

    3.27. Investment of large amounts of cash to the account with a very low remaining and just after withdrawal of the invested cash or remittance to another account or accounts.

    Indicators Related To Electronic Transfers

    3.28. Making transfers in remarkable amounts at one go from or to risky countries or off-shores without making any reasonable explanation or frequent and low amounts of transfers which may reach significant amounts in a specific period.

    3.29. Not making a reasonable statement relating to realization purpose of electronic fund transfers which are in conspicuous amounts and frequency or directed from risky countries, not filling up the blanks that the full name and addresses of supervisor and beneficiary in transfer messages or placing expressions such as nickname, code, abbreviation instead of real supervisors name in these blanks.

    3.30. Making domestic or abroad electronic fund transfers in conspicuous frequency and amount which cannot be associated with the known business and activities, sources and level of income of the customer.

    3.31. Returning the incoming funds transferred from abroad to the accounts or the names of the customers with registered addresses inside or outside the country back to abroad after a short period of time, or the customer requesting from the bank clerk to transfer the amounts to abroad that he/she expects to be transferred from abroad but not entered into his/her accounts yet; similar amounts of funds entering into and exiting the country on close dates through such accounts used as transitory accounts.

    3.32. The customer opening several accounts in the same kind of foreign exchange without any specific reason; especially transferring the funds which he/she brought in cash or which were deposited into his/her account in cash to the persons and organizations located in free trade zone or off-shores with whom there are no ostensible business relationships.

    3.33. Opening of account for only the purpose of transferring money abroad, existing no information or insufficient information regarding the relationship between the persons the transfers were made.

    3.34. The customer making indirect electronic fund transfers not associated with his/her personal and economical statute.

    3.35. Receiving high amounts of remittances from an account newly opened after a short time from opening and not carrying out any other transactions relating to the incoming money for a long time.

    3.36. Carrying out transactions in foreign exchange through wire transfers on behalf of a customer and with the persons or countries who have not any commercial relation with this customer by a third person.

    Indicators Related To Credit Transactions

    3.37. Guarantee letter requesting of real and legal persons who are not acknowledged by the bank for cash credit or goods purchase and taking no notice of bank commission, charges or interest rates by these persons.

    3.38. The customer gives a check (high amounted and drawn on a foreign bank) as a guarantee to the bank which gave credit, containing contradictory information regarding the commercial activity where it was originated, not having a supportive document, not pertaining to a drawer and endorsers who can be correlated commercially, and who are associated with risky regions and countries about fraud and smuggling.

    3.39. Using credits from the banks located in risky countries or demanding for credit pursuant to the letters provided from these banks.

    3.40. Credit request of customer, without any reasonable grounds, providing collateral the assets of the companies registered or third parties resident in risky countries.

    3.41. Credit request of customer, although he/she has significant assets, which is not rational for him/her providing the concerning assets as collateral.

    3.42. Credit request of customer providing bearer instruments of which has indefinite resource or another asset having a suspicious (unknown) resource as collateral.

    3.43. The potential credit customer acts unwillingly in determining the purpose of taking credit or refuses to explain the purpose or states a doubtful purpose.

    3.44. Providing collateral, without basing on a reasonable ground, by third parties who are not known by the bank and not having affiliation with the customer.

    3.45. Cash withdrawals of credit customers continuously in remarkable amounts, constant and/or extraordinary usage of credit cards in buying and selling of valuable goods such as gold which can be easily converted into cash.

    3.46. Refunding of a credit, without basing on a reasonable ground and adventitiously, at once which is unexpired or having problems.

    4. Types Related To Insurance Sector

    4.1. The customer makes an application for the insurance of a risk which is not having a reasonable concern with the personality, business or wealth of the customer.

    4.2. The customer requests policy in high amounts and single premium which is not accorded with the general status and financial profile of him/her.

    4.3. The customer says he/she has also policies from other companies or determination of this and showing this situation incongruity with the financial profile of the customer.

    4.4. The customer suggests purchasing insurance policy on behalf of a third party who is understood to be clearly disinterested with him/her or requesting transfer of insurance indemnity to the account of said party or asking for changing the beneficiary on behalf of the third party who is understood to be clearly disinterested.

    4.5. The customer pays high amounts of pension or life insurance policies premiums by cash.

    4.6. The customer, possessing policy based on minute quantity and regular payment, closes the remaining premiums of the policy abruptly by cash payment or proposes increasing in significant amount or purchases a new policy in high amounts.

    4.7. Request of customer, without any reasonable grounds and by being aware of giving rise to a financial loss in considerable amount, the repayment of policy prior to its maturity or the payment to be made in favor of third parties.

    4.8. Making the payment in single premium assurance contract via electronic transfer from a financial institution located in a risk country.

    4.9. Application of customer for retirement plan or life insurance contract that is inconsistent with his/her age and physical condition.

    5. Types Related To Capital Markets

    5.1. The customer gives conspicuous orders which are unreasonable and mostly resulting with loss by giving the impression of not seeking profit, taking no notice of the risks and costs of investments, and carrying out transactions to this effect.

    5.2. Credit usage of customer in remarkable amounts and non-proportional to his/her financial status or collateral provided for the credit by the third parties who has no relation with customer.

    5.3. The customer abruptly closes the security credit he/she has taken before maturity without a situation concerning the market conditions or another reasonable cause.

    5.4. Customer constantly transfers securities and/or cash to the accounts of the persons who have no relation with the customer within several intermediary institutions without any reason.

    5.5. The customer purchases securities or other capital market instruments in remarkable amounts by using cash which cannot be accorded with the familiar activities of him/her.

    5.6. Transferring, immediately, of financial investments and/or proceeds of them to the third parties that there is no apparent relationship with the customer.

    5.7. Prohibition imposed on transactions against the partners or founders of corporate customer by Capital Markets Board.

    5.8. The customer carries out transactions which raise suspicion that it is acted for the benefit of person on whom transaction prohibition is imposed by Capital Markets Board.

    6. Types Related to Exchange Offices

    6.1. Repeated requests from an exchange office for foreign exchange purchasing-selling transactions in the amounts slightly less than the transaction limit for identification in a short period of time.

    6.2. Carrying out purchasing-selling or exchanging transactions with foreign exchange in remarkable amounts.

    6.3. Exchange of unusually large amount of small-denominated notes for those of higher denomination.

    6.4. The banknotes brought by customers; being small denominated and dirty, existence of stains demonstrating that it has been carried concealing in various elements and giving off smell, packaged carelessly and precipitately, lacking or exceeding substantially than the declaration of customer when counted, coming across with counterfeit banknotes in the bankroll.

    6.5. Requesting for converting large amounts of foreign exchange which is not convertible (or not frequently used) to another kind of foreign exchange or Turkish Liras.

    7. Types Related to Money Lenders

    7.1. In case where a debtor requests for a loan in return for his/her asset whose origin is suspicious (unknown).

    7.2. In case where a debtor requests for an uneconomical loan even though he/she has large amount of asset.

    7.3. In case where refunds are made through bearer cheques or cheques of a third party or cheques endorsed again and again or through large amount of cash.

    7.4. Refunding an undue or problematic credit abruptly.

    8. Types Related to Factoring Companies

    8.1. In case where a firm (seller) who had transferred its claim derived from forward sale to the factor sells good or service to its customers who may be natural or legal persons (buyers) constantly for high prices according to market conditions.

    8.2. In case where buyer firm pays off its termed debts exceeding its own financial capacity or makes commitment to pay its debts or in this circumstance seller firm gives guarantee that buyer firm will pay its debts.

    8.3. In case where there is a suspicion that buyer firm or seller firm may be shell companies or that there may be a fictitious transaction carried out between them.

    8.4 In case where there is a suspicion that whether the invoices submitted to factoring company are original.

    9. Types Related to Financial Leasing Companies

    9.1. Leasing machinery and equipment through financial leasing with inappropriate prices as to current market value or its foreseeable values.

    9.2. Financial leasing payments amounts of which are much larger than usual ones requested or financial leasing payments reasons of which are not given.

    9.3. Refunding financial leasing debts unexpectedly, before deadline and through unknown source.

    9.4. Execution of the terms and payments of financial leasing contract by third parties or the persons supplying the goods subject to financial leasing without any reasonable ground in place of lessee.

    10. Types Related to Consumer Finance Companies

    10.1. In case where customer refunds the credit abruptly and makes payment with large amount of cash without any reasonable ground and particularly in a manner where he/she is exposed to large amount of material loss.

    10.2. In case where customer requests for unprofitable credit for himself/herself in return for large amount of assets held by the customer.

    10.3. In case where it seems that customer disregards of credit costs and maturity.

    11. Types Related to Postal and Cargo Services And Cargo Companies

    11.1. In case where it is detected that there is a different material in the parcel sent via postal or cargo service from the material declared by the sender.

    11.2. Permanently sending precious stones, metals and valuable things like them to particular addresses apart from the traders or manufacturers of the related sector.

    12. Types Related to Real-Estate Sector

    12.1. In case where customer buys real-estate for third parties without any reasonable ground such as business or family relation.

    12.2. In case where customer buys real-estate with high value which is not consistent with the financial status of the customer or buys several real-estates in a short time on which he/she does not make any search and which is not economical with regard to location and conditions and which requires large amount of maintenance cost.

    12.3. In case where customer who wants real-estate agency to sell his/her real-estate requests the agency to indicate sale price more than the amount in the records.

    12.4. In case where customer makes payment for rest of the money through extraordinary payment method after he/she makes advance payment with cash or leases the real-estate by using large amount of cash.

    TYPES OF TRANSACTIONS RELATED TO FINANCING TERRORISM

    13. Types of transactions carried out with the persons or with risky countries suspected to be in connection with terrorist organizations

    13.1. Opening an account, carrying out wire transfers or remittances on behalf of natural and legal persons that are known to be in relation with a terrorist organization.

    13.2. Transferring the money, which is in amounts that have no commercial explanation or economical purpose, through wire transfer to a commercial account opened in risky countries and/or withdrawing this money from the account.

    13.3. Transferring or receiving funds to and/or from risky countries, opening account within the financial institutions in these countries or using the credit cards issued by the banks located in those countries.

    13.4. Transferring funds by third persons on behalf of customers through exchanging foreign currency to the countries in which terrorism and smuggling are seen frequently; or which are known as tax havens; and which have no clear business relation with the customer

    13.5. Transferring to third persons the deposits accumulated in a short period of time as a result of the transfer transactions conducted from or through the risky countries.

    13.6. Collecting funds especially from or into risky countries using a high number of individual or commercial accounts and directing those funds to a small number of beneficiaries.

    13.7. In the fund transfers carried out from or to risky countries, using commercial financial transactions which have no reasonable commercial purpose.

    14. Types of transactions related to non-profit organizations

    14.1. In case where a mismatch is detected between the nature and size of financial transactions or amount of funds raised or transferred and the apparent sources, stated purpose and activities of the NPO.

    14.2. In case where a sudden increase is detected in the frequency and amounts of financial transactions on the account of an NPO.

    14.3. In case where NPO appears to keep funds in its account for a very long period.

    14.4. In case where NPO receives donations only from abroad or significant part of the donations is originated from abroad.

    14.5. In case where directors of NPO are foreign nationals; particularly existence of transactions with large amounts carried out by the directors to their own countries and also destination is a high-risk jurisdiction.

    14.6. In case where NPO has unexplained links; for example, several NPOs transfer money to each other or share the same address, same managers or personnel.

    14.7. In case where NPOs having no enough personnel, suitable offices or telephone numbers have large financial turnover as if they operate intensively.

    14.8. Receiving funds by using several individual and commercial accounts or accounts of non-profit organizations and transferring these funds to foreign beneficiaries in a short period of time.

    ANNEX: 2

    SUSPICIOUS TRANSACTION REPORTING FORM

    Financial Crimes Investigation Board
    Ministry of Finance, N Blok
    Dikmen Cad. 06100
    Dikmen/ANKARA

    Tel: +90 (312) 415 37 67
    Fax: +90 (312) 415 25 35
    +90 (312) 415 25 36

    A-OBLIGED PARTY FILLING THE FORM

    Name-Surname- Title  :

    Obliged Party Group  :

    Address :

    Phone :

    ID Number :

    B-INFORMATION ABOUT THE REPORT

    Date of the Report

    Document Entry No.

     

    New or Supplementary

    ¨ New
    ¨ Supplementary

    If supplementary, date of previous report : .../.../¿.

    Urgency of the Report

    ¨ Normal ¨Urgent ¨ Very Urgent

    C-NATURAL PERSON CARRYING OUT SUSPICIOUS TRANSACTION4

    For whom the transaction is carried out

    ¨ On behalf of himself/herself ¨ On behalf of another person

    Is ID-Card False?

    ¨ Yes ¨ No

    Name

    Surname

    Date and Place of Birth

    Mother’s Name

    Father’s Name

    Gender

    ¨ Male ¨ Female

    Nationality

    TR ID No

    Type and No of ID Document

    ¨ ID-Card No:
    ¨ Driver License No:
    ¨ Passport No:
    ¨ Residence Permit No:
    ¨ Other (Type and No):

    Address

    ¨ Home:
    ¨ Business:

    Phone

    ¨ Home:
    ¨ Mobile:
    ¨ Business:

    Fax No

    e-mail

    Occupation

    Additional information, if any

    D-NATURAL PERSON ON BEHALF OF WHOM THE TRANSACTION IS CARRIED OUT

    Is ID-Card False?

    ¨ Yes ¨ No

    Name

    Surname

    Date and Place of Birth

    Mother’s Name

    Father’s Name

    Gender

    ¨Male ¨ Female

    Nationality

    TR ID No

    Type and No of ID Document

    ¨ ID-Card No:
    ¨ Driver License No:
    ¨ Passport No:
    ¨ Residence Permit No:
    ¨ Other (Type and No):

    Address

    ¨ Home:
    ¨ Business:

    Phone

    ¨ Home:
    ¨ Mobile:
    ¨ Business:

    Fax No

    e-mail

    Occupation

    Additional information, if any

    E-LEGAL PERSON/ORGANIZATION NOT LEGAL PERSON ON BEHALF OF WHOM THE TRANSACTION IS CARRIED OUT

    Is ID Document False?

    ¨ Yes ¨ No

    Title

     

    Name of Business Enterprise, if any

     

    Tax Identification Number

     

    Trade Registry No

     

    The Country Where it is established

     

    Place of Establishment

     

    Date of Establishment

     

    Address

     

    Phone

    ¨ Mobile :
    ¨ Business :

    Fax

     

    e-mail

     

    website

     

    Additional information, if any

     

    F-INFORMATION ABOUT THE SUSPICIOUS TRANSACTION

    Date of the Transaction

    ¨ In a Single Transaction : ../../¿.
    ¨ In the Connected Transactions : ../../¿. - ../../¿.

    Is there any monetary value / movement in the transaction?

    ¨Yes ¨ No

    Whether the transaction is connected with an account

    ¨ Connected (In case of marking this option, please fill the Section B of the Form)
    ¨ Not connected

    Place where the transaction is carried out

     

    Type of the transaction

     

    Amount of the transaction

     

    Place where the transaction is carried out or its method

    ¨ Branch ¨ ATM ¨ Internet banking
    ¨ Phone banking ¨ Other

    G-ACCOUNT INFORMATION RELATED TO THE SUSPICIOUS TRANSACTION REPORT

    Type of Account

    ¨ Cheque ¨ Safe-Deposit Box ¨ Forward Exchange ¨ Exchange Deposit
    ¨ Demand Deposit ¨ Investment
    ¨ Other

    Financial Institution within which the account is held.

     

    Account No

     

    IBAN

     

    Account Owner

     

    Opening Date of the Account

    ../../¿.

    Closing Date of the Account

     

    Last Balance of the Account

     

    Branch within which the account is held.

     

    Exchange Type of the Account

     

    Is there any legal restriction on the account?

    ¨Yes ¨ No

    Explanation on the legal restriction

     

    H-TYPE OF SUSPICIOUS TRANSACTION

    TYPES OF SUSPICIOUS TRANSACTIONS

    TYPE NO

     

    TYPES OF SUSPICIOUS TRANSACTIONS IN GENERAL

     

     

    Types related to customer profile

     

     

     

    Types related to transactions

     

     

    TYPES OF SUSPICIOUS TRANSACTIONS AS TO SECTORS

     

     

    Types related to banking sector

     

     

     

    Types related to insurance sector

     

     

     

    Types related to capital market

     

     

     

    Types related to authorized institutions

     

     

     

    Types in relation to money lenders

     

     

     

    Types in relation to factoring companies

     

     

     

    The types in relation to financial leasing companies

     

     

     

    The types in relation to consumer finance companies

     

     

     

    The types in relation to postal and cargo services and
    cargo companies

     

     

     

    The types in relation to real-estate sector

     

     

    THE TYPES OF TRANSACTIONS IN RELATION TO FINANCING TERRORISM

     

     

    The types of transactions carried out with the persons or with risky countries suspected to be in connection with terrorist organizations

     

     

     

    The types of transactions in relation to non-profit organizations

     

     

    EXPLANATION

     

     

     

    [42]

     

     

    F. Correspondent Banking

     

    Pursuant to the article 23 of the Regulation on Measures Regarding Prevention of Laundering Proceeds of Crime and Financing of Terrorism financial institutions shall take necessary measures in foreign correspondent relationships in order to;
    i) Obtain, by making use of publicly available resources, reliable information on whether the respondent financial institution has been subject to a money laundering and terrorist financing investigation and been punished, its business field, reputation and the adequacy of inspection on it,
    ii) Assess anti-money laundering and terrorist financing system of the respondent financial institution and to ascertain that the system is appropriate and effective,
    iii) Obtain approval from a senior manager before establishing new correspondent relationships
    iv) Clearly determine their and the respondent financial institution’s responsibilities by a contract.[43]

    1) Payable-Through Accounts

     

    In cases where the correspondent relationship includes the use of payable- through account be satisfied that the correspondent financial institution has taken adequate measures pursuant to principles in the Regulation on Measures Regarding Prevention of Laundering Proceeds of Crime and Financing of Terrorism and will be able to provide the identification information of the relevant customers when requested.[44]

    G. Shell Banks

     

    A shell bank is a bank that has no physical presence in the country or territory in which it is incorporated or licensed and which is not a member of a group of corporate bodies which is subject to effective consolidated supervision.

     

    Financial institutions shall not establish correspondent relationship with shell banks and financial institutions about which they cannot be sure that these institutions do not permit their accounts to be used by shell banks.[45]

     

    H. Interested Person and Watch Lists

     

    1) Countries Determined to Insufficiently Apply the FATF Recommendations

     

    Turkey does not have any specific requirement that financial institutions pay special attention to business relationships and transactions with people from or in countries which do not or insufficiently apply the FATF Recommendations. 

     

    2) High Risk Individuals

     

    Pursuant to the article 24 of the Regulation on Measures Regarding Prevention of Laundering Proceeds of Crime and Financing of Terrorism; Financial institutions are required to pay special attention to business relationships and transactions with the natural and legal persons, unincorporated organizations and the citizens located in risky countries and to obtain information about the purpose and the nature of the transactions, as far as possible, which have no apparent reasonable legitimate and economic purpose and to record them.[46]

     

    I. Record Keeping Requirements

     

    1) Information that is Required to be Stored

     

    Pursuant to the article 31 of the Regulation on Measures Regarding Prevention of Laundering Proceeds of Crime and Financing of Terrorism; When requested by MASAK or examiners, public institutions and organizations, natural and legal persons, and unincorporated organizations shall provide all kinds of information, documents and related records in every type of environment including microchips, microfilms, magnetic tapes, disks, and any kind of information and passwords necessary for fully and accurately accessing to or making these records decipherable, and render necessary convenience.
    Those from whom information and documents are requested may not avoid giving information and documents by alleging the provisions of special laws, provided that the defense right is reserved.[47]

     

    2) Length of Time to Retain Records

     

    Pursuant to the article  17 of the Regulation on the Procedures and Principles For Accounting Practices and Retention of Documents by Banks; The banks are obligated to retain for presentation whenever requested within their own premises the originals of any documents concerning their operations or their copies in a manner leaving no room for their accuracy if keeping originals is not possible as well as mechanically reproduced copies of any letters sent to their customers or private or public entities, which shall be arranged by assigning them dates and numbers sequentially, including any letters, telegrams, electronic mails, notices and notifications any other letters received from their customers or public or private entities and organizations for ten years.

     

    It is obligatory that registration of documents referred to by the above paragraph is maintained under a correspondence registration system by assigning them dates, numbers and subjects. Provided that the limitations imposed by other laws are reserved, banks may retain documents other than statutory books on microfilms, microfiches or electronic, magnetic or other similar media in a manner allowing their presentation in case of a request.[48]

     

    Therefore pursuant to the article 46 of the Regulation on Measures Regarding Prevention of Laundering Proceeds of Crime and Financing of Terrorism; Obliged parties shall retain for eight years the documents, in all forms, regarding their transactions and obligations starting from the drawn up date, books and records from the last record date, identification documents from the last transaction date; and submit them when requested. The starting date of retaining period relating to documents on customer identification concerning the accounts within obliged parties is the date when the account has been closed.
    Documents and records of suspicious transactions reports made to MASAK or internal reports made to the compliance officer, documents attached to reports, the written reasons relating to suspicious transactions decided not to be reported by compliance officers are all in the scope of obligation of retaining and submitting.[49]

     

    J. Implementation of Compliance Programs

     

    1) Compliance Programs

     

    Pursuant to the article 4 of the Regulation on Program of Compliance With Obligations of Anti-Money Laundering and Combating the Financing of Terrorism; The following obliged parties out of those listed in Article 4 of the Regulation on Measures Regarding Prevention of Laundering Proceeds of Crime and Financing of Terrorism shall develop compliance program:

    i) Banks (Except for Central Bank of Republic of Turkey, Development and Investment Banks),

    ii) Capital Markets Brokerage Houses,

    iii) Insurance and pension companies,

    iv) General Directorate of Post (pertaining only to banking activities)

    The compliance program shall cover abroad branches, agencies, representatives, commercial representatives and similar affiliated units of obliged parties whose head offices are in Turkey to the extent that the legislation and competent authorities of the country where they are located permit.[50]

     

                            a) Compliance Officers

     

    Pursuant to the provisions of the Regulation on Program of Compliance With Obligations of Anti-Money Laundering and Combating the Financing of Terrorism; The executive board is ultimately responsible for carrying out the whole compliance program adequately and efficiently appropriate for the scope and nature of activities of the obliged party.

    The executive board is authorized to and responsible for assigning compliance officer, explicitly determining in written form the authorities and responsibilities of the compliance officer and the compliance unit, ratifying institutional policies, annual training programs and amendments to be made in accordance with developments, assessing the results of risk management, monitoring, control and internal control activities carried out under the scope of the compliance program, taking required measures for timely elimination of the detected errors and deficiencies, and ensuring an efficient and coordinated performance of all the activities carried out under the scope of the compliance program.

     

    The obliged parties shall assign compliance officer for the execution of compliance program. The compliance officer shall be assigned as attached to executive board or one or more members to whom the executive board has transferred its authority.

     

    The following qualifications are sought for the persons to be assigned as compliance officer:

    i) To be a citizen of the Republic of Turkey,

    ii) Not to be deprived of civil rights,

    iii) Except for reckless offences and irrespective of any previous amnesty, not to have been sentenced to heavy imprisonment or imprisonment of more than five years under abolished Turkish Penal Code No 765 and other laws or an imprisonment of more than three years under Turkish Penal Code No. 5237 or other laws, or not to have been convicted of opposition to abolished Law No. 3182 on Banks and Banking Law No.5411,and the provisions of Banking Law No.5411, Capital Market Law No. 2499 and legislation on money lending matters, which require imprisonment, or infamous crimes of simple embezzlement, aggravated embezzlement, embezzlement, defalcation , extortion, bribery, theft, theft by deception, forgery, abuse of trust, bankruptcy by deception, smuggling offences other than those arisen by the acts of using and consuming, fraud during official tenders and purchase-sale or crimes committed against State and disclosure of state confidentiality, offences against the symbols of State Sovereignty and the reputation of its organs, offences against state security, offences against the constitutional order and its functioning, offences against national defense, offences against state confidentiality and espionage, offences against relations with foreign countries tax evasion, offences of laundering proceeds of crime and terrorist financing or participation to these crimes,

    iv) To have graduated from a higher education institution providing a minimum four year-program in Turkey (or abroad provided that its equivalency is recognized by the Council of Higher Education)

    v) To have served for at least five years in the manager, expert or supervisor positions within any of the financial institutions specified in the Article 4 Paragraph 1 of this Regulation (including the Central Bank of the Republic of Turkey and development and investment banks) or in the examiner positions specified in the Article 2 paragraph 1 of the law or in manager or expert positions within MASAK.

    vi)  Not to be a qualified shareholder or not to take part in management within the obliged party or its affiliates,

    vii) Not to be the spouse or a relative by blood up to second degree (including second degree) or by marriage of the partner who is a qualified shareholder, the executive board members or director general of the obliged party.[51]

     

                            b) Compliance Monitoring Programs

     

    Pursuant to the article 26 of Regulation on Program of Compliance With Obligations of Anti-Money Laundering and Combating the Financing of Terrorism; The obliged parties shall ensure, annually and on a risk-based approach, examination and controlling of institutional policy and procedures, risk management, monitoring and controlling activities and whether the training activities are sufficient and efficient, sufficiency and efficiency of risk policy of obliged party, whether the transactions are carried out in compliance with Law and regulation and communiques issued in accordance with Law and institutional policy and procedures.[52]

     

    2) Civil and Criminal Penalties

     

    Pursuant to the article 13 of the Law on Prevention of Laundering Proceeds of Crime; The obliged parties who do not fulfill the obligations of assignment of an officer for compliance to ensure internal risk control shall be given at least 30 days in order to remove deficiencies and to take necessary measures. If the obliged parties don’t remove deficiencies and take necessary measures then they shall be punished with administrative fine of five thousand Turkish Liras by the Presidency. If the obliged party is a bank, finance company, factoring company, money lender, financial leasing company, insurance and reinsurance company, pension company, capital market institution or bureau de change, administrative fine shall be applied two-fold.[53]

     

    1). International Groups in which Turkey is a Member

     

    Turkey is a member of several different international organizations that regulate against money laundering and terrorist financing. On 25 September 1991 Turkey became a member of FATF[54]. In June, 1998 Turkey became a member of the Egmont Group of FIUs[55]. On 1 January 2004, Turkey became a member of the “Group of States against Corruption” (GRECO)[56].

     

    Turkey has also implemented many international conventions and treaties in regard to money laundering and terrorist financing as follows;

     

    27 December 1980: Council of Europe, Committee of Ministers, “Recommendation No.R(80) 10 on Measures Against the Transfer and Safekeeping of Funds of Criminal Origin” has been adopted.  

    10 January 2002: Turkey has ratified UN International Convention for Suppression of the Financing Terrorism.

    30 January 2003: Turkey has ratified UN Convention against Transnational Organized Crime

    17 April 2003: Turkey has ratified Council of Europe Civil Law Convention on Corruption dated 04.11.1999  

    16 June 2004: Turkey has ratified Council of Europe Convention No.141 on Laundering, Search, Seizure and Confiscation of the Proceeds from Crime (Strasbourg Convention)  

    18 May 2006: Turkey has ratified the UN Convention against Corruption  

    28 March 2007: Turkey has signed the Council of Europe Convention on Laundering, Search, Seizure and Confiscation of the Proceeds from Crime and on the Financing of Terrorism.[57]  

     

    Turkey also is a party of the Hague Convention, Convention relating to civil procedure, Convention on the law applicable to international sales of goods, Convention on the law governing transfer of title in international sales of goods, Convention on the jurisdiction of the selected forum in the case of international sales of goods, Convention relating to the settlement of the conflicts between the law of nationality and the law of domicile, Convention concerning the recognition of the legal personality of foreign companies, associations and institutions, Convention on the law applicable to maintenance obligations towards children, Convention concerning the recognition and enforcement of decisions relating to maintenance obligations towards children, Convention concerning the powers of authorities and the law applicable in respect of the protection of minors, Convention on the Conflicts of Laws relating to the Form of Testamentary Dispositions, Convention Abolishing the Requirement of Legalization for Foreign Public Documents,  Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters, Convention on the Choice of Court, Convention on the Recognition and Enforcement of Foreign Judgments in Civil and Commercial Matters , Convention on the Taking of Evidence Abroad in Civil or Commercial Matters , Convention concerning the International Administration of the Estates of Deceased Persons, Convention on the Law Applicable to Trusts and on their Recognition, Convention on the Law Applicable to Contracts for the International Sale of Goods, Convention on the Law Applicable to Certain Rights in respect of Securities held with an Intermediary. 

     

     

    2)  Cooperation with Foreign Countries

     

    Turkey cooperates with international law enforcement on money laundering and terrorist financing cases.  Turkey is a party to the European Convention on Extradition and has signed extradition agreements with: United States of America, Algeria, Morocco, Iraq, Iran, Kazakhstan, Kuwait, Libya, Lebanon, Egypt, Mongolia, Uzbekistan, Pakistan, Syria, Tajikistan, Tunisia, Jordan.

     

    Turkey South also has informal cooperation with many countries through police cooperation agreements.  These are used for the exchange of information, expertise and training.  Turkey has a police cooperation agreement with the following:  Germany, Andorra, Argentina, Albania, Australia, Austria, Belgium, Bosnia and Herzegovina, Brazil, Brunei, Bulgaria, China, Denmark, Estonia, Finland, France, Ghana, Guam, South Africa, Croatia, India, Netherlands Antilles, United Kingdom, Ireland, Spain, Israel, Sweden, Switzerland, Italy, Iceland, Jamaica, Kenya, Colombia, Kosovo, Lebanon, Macedonia, Malaysia, Mexico, Moldova, Namibia, Nigeria, Norway, Panama, Papua New Guinea, Peru, Poland, Puerto Rican, Romanian, Singapore, Slovenia, Sri Lanka, Chile, Ukraine, Jordan, Thailand, New Zealand, Turkish Republic of Northern Cyprus Greece, U.A.E, U.S.A.[58]

     

    The MASAK has signed MOUs with the FIUs of the following countries for exchange information to avoid money laundering: Indonesia, Portugal, Sweden, Mongolia, Afghanistan, Georgia, Albania, Syria, Romania, Macedonia, Korea, Croatia, Bosnia and Herzegovina, Japan, Ukraine, Norway, Jordan, Senegal, Luxemburg, Belarus, United Kingdom, Canada, Monaco, Finland, Australia, U.S.A, Poland, Holland, Malaysia, Belgium, Kosovo, Turkish Republic of Northern Cyprus.[59]

    The MASAK has launched mutual agreements with the FIUs of following countries:

    Slovenia, Germany, Poland, Greece, Italy, Bulgaria, Romania, Turkish Republic of Northern Cyprus.[60]

     

     



    [1] Republic of Turkey Ministry of Finance MASAK, Activity Report 2006 (released March 2007): http://www.masak.gov.tr/media/portals/masak2/files/2006ActivityReport.pdf

    [3] FATF Financial Action Task Force, Third Mutual Evaluation Report Anti-Money Laundering and Combating The Financing Of Terrorism, Turkey, (23 February 2007):

    http://www.fatf-gafi.org/media/fatf/documents/reports/mer/MER%20Turkey%20full.pdf

    [4] FATF Financial Action Task Force, Third Mutual Evaluation Report Anti-Money Laundering and Combating The Financing Of Terrorism, Turkey, (23 February 2007):

    http://www.fatf-gafi.org/media/fatf/documents/reports/mer/MER%20Turkey%20full.pdf

    [5]International Standards on Combating Money Laundering And The Financing Of Terrorism&Proliferation, The FATF Recommendations  (February 2012): http://www.imolin.org/pdf/imolin/FATF&under;New&under;Standards.pdf

    [6] FATF Financial Action Task Force, Third Mutual Evaluation Report Anti-Money Laundering and Combating The Financing Of Terrorism, Turkey, (23 February 2007):

    http://www.fatf-gafi.org/media/fatf/documents/reports/mer/MER%20Turkey%20full.pdf

    [7] FATF 40+9 Special Recommendations on Money Laundering&Terrorist Financing: http://www.accessbankplc.com/Library/Documents/Download%20Centre/FATF.pdf

    [8] FATF Financial Action Task Force, Third Mutual Evaluation Report Anti-Money Laundering and Combating The Financing Of Terrorism, Turkey, (23 February 2007):

    http://www.fatf-gafi.org/media/fatf/documents/reports/mer/MER%20Turkey%20full.pdf

    [9] FATF 40+9 Special Recommendations on Money Laundering&Terrorist Financing: http://www.accessbankplc.com/Library/Documents/Download%20Centre/FATF.pdf

    [10] FATF Financial Action Task Force, Third Mutual Evaluation Report Anti-Money Laundering and Combating The Financing Of Terrorism, Turkey, (23 February 2007):

    http://www.fatf-gafi.org/media/fatf/documents/reports/mer/MER%20Turkey%20full.pdf

    [11] FATF Financial Action Task Force, Third Mutual Evaluation Report Anti-Money Laundering and Combating The Financing Of Terrorism, Turkey, (23 February 2007):

    http://www.fatf-gafi.org/media/fatf/documents/reports/mer/MER%20Turkey%20full.pdf

    [12] FATF Financial Action Task Force, Third Mutual Evaluation Report Anti-Money Laundering and Combating The Financing Of Terrorism, Turkey, (23 February 2007):

    http://www.fatf-gafi.org/media/fatf/documents/reports/mer/MER%20Turkey%20full.pdf

    [13] International Standards on Combating Money Laundering And The Financing Of Terrorism&Proliferation, The FATF Recommendations  (February 2012): http://www.imolin.org/pdf/imolin/FATF&under;New&under;Standards.pdf

    [14] FATF 40+9 Special Recommendations on Money Laundering&Terrorist Financing: http://www.accessbankplc.com/Library/Documents/Download%20Centre/FATF.pdf

    [15] FATF Financial Action Task Force, Third Mutual Evaluation Report Anti-Money Laundering and Combating The Financing Of Terrorism, Turkey, (23 February 2007):

    http://www.fatf-gafi.org/media/fatf/documents/reports/mer/MER%20Turkey%20full.pdf

    [16] FATF 40+9 Special Recommendations on Money Laundering&Terrorist Financing: http://www.accessbankplc.com/Library/Documents/Download%20Centre/FATF.pdf

    [17] FATF Financial Action Task Force, Third Mutual Evaluation Report Anti-Money Laundering and Combating The Financing Of Terrorism, Turkey, (23 February 2007):

    http://www.fatf-gafi.org/media/fatf/documents/reports/mer/MER%20Turkey%20full.pdf

    [18] U.S. Department of State, Vol II International Narcotics Control Strategy Report (released March 2012). “Money Laundering and Financial Crimes”:  http://www.state.gov/documents/organization/185866.pdf

    [19] U.S. Department of State, Vol II International Narcotics Control Strategy Report (released March 2012). “Money Laundering and Financial Crimes”: http://www.state.gov/documents/organization/185866.pdf

    [20] The Law No. 5549 on Prevention of Laundering Proceed of Crime

    http://www.masak.gov.tr/en/laundering-proceeds-of-crime/national-combat/The-Law-No-5549.aspx

    [21] Republic of Turkey Ministry of Finance Financial Crimes Investigation Board  http://www.masak.gov.tr/en/legislation/LaunderingProceedsofCrime/national-legislation.aspx

    [22] Republic of Turkey Ministry of Finance Financial Crimes Investigation Board  http://www.masak.gov.tr/en/board/mission-vision.aspx

    [23] Turkish Penal Code, Law No 5237

    http://www.justice.gov.tr/basiclaws/Criminal&under;Code.pdf

    [24] Law on Fight Against Terrorism

    http://www.justice.gov.tr/basiclaws/Law&under;on&under;Figh.pdf

    [25] The Law on Fight Against Terrorism

    http://www.justice.gov.tr/basiclaws/Law&under;on&under;Figh.pdf

    [26] The Law on Fight Against Terrorism

    http://www.justice.gov.tr/basiclaws/Law&under;on&under;Figh.pdf

    [27]A Guideline For The Turkish Banking System on Significance of Fight Against Laundering of Crime Revenues and Financing Terrorism,  The Banks Association of Turkey, January 2006

    http://www.tbb.org.tr/eng/Duzenlemeler/Yasal&under;duzenlemeler.aspx

    [28] A Guideline For The Turkish Banking System on Significance of Fight Against Laundering of Crime Revenues and Financing Terrorism,  The Banks Association of Turkey, January 2006

    http://www.tbb.org.tr/eng/Duzenlemeler/Yasal&under;duzenlemeler.aspx

    [29] Republic of Turkey Ministry of Finance Financial Crimes Investigation Board  http://www.masak.gov.tr/en/legislation/LaunderingProceedsofCrime/national-legislation.aspx

    [30] Republic of Turkey Ministry of Finance Financial Crimes Investigation Board  http://www.masak.gov.tr/en/legislation/LaunderingProceedsofCrime/national-legislation.aspx

    [31] Republic of Turkey Ministry of Finance Financial Crimes Investigation Board  http://www.masak.gov.tr/en/legislation/LaunderingProceedsofCrime/national-legislation.aspx

    [32] Republic of Turkey Ministry of Finance Financial Crimes Investigation Board  http://www.masak.gov.tr/en/legislation/LaunderingProceedsofCrime/national-legislation.aspx

    [33] Republic of Turkey Ministry of Finance Financial Crimes Investigation Board  http://www.masak.gov.tr/en/legislation/LaunderingProceedsofCrime/national-legislation.aspx

    [34] Republic of Turkey Ministry of Finance Financial Crimes Investigation Board  http://www.masak.gov.tr/en/legislation/LaunderingProceedsofCrime/national-legislation.aspx

    [35] Republic of Turkey Ministry of Finance Financial Crimes Investigation Board  http://www.masak.gov.tr/en/legislation/LaunderingProceedsofCrime/national-legislation.aspx

    [36] FATF Financial Action Task Force, Third Mutual Evaluation Report Anti-Money Laundering and Combating The Financing Of Terrorism, Turkey, (23 February 2007):

    http://www.fatf-gafi.org/media/fatf/documents/reports/mer/MER%20Turkey%20full.pdf

    [37] Republic of Turkey Ministry of Finance Financial Crimes Investigation Board  http://www.masak.gov.tr/en/legislation/LaunderingProceedsofCrime/national-legislation.aspx

    [38]Republic of Turkey Ministry of Finance Financial Crimes Investigation Board 

    http://www.masak.gov.tr/media/portals/masak2/files/en/Legislation/Communiques/communique6.htm

    [39] Republic of Turkey Ministry of Finance Financial Crimes Investigation Board  http://www.masak.gov.tr/en/legislation/LaunderingProceedsofCrime/national-legislation.aspx

    [40] Republic of Turkey Ministry of Finance Financial Crimes Investigation Board 

    http://www.masak.gov.tr/media/portals/masak2/files/en/Legislation/Regulations/measures.htm

    [41] Republic of Turkey Ministry of Finance Financial Crimes Investigation Board 

    http://www.masak.gov.tr/media/portals/masak2/files/en/Legislation/Regulations/measures.htm

    [42] Republic of Turkey Ministry of Finance Financial Crimes Investigation Board 

    http://www.masak.gov.tr/media/portals/masak2/files/en/Legislation/Regulations/measures.htm

    [43] Republic of Turkey Ministry of Finance Financial Crimes Investigation Board 

    http://www.masak.gov.tr/media/portals/masak2/files/en/Legislation/Regulations/measures.htm 

    [44] Republic of Turkey Ministry of Finance Financial Crimes Investigation Board 

    http://www.masak.gov.tr/media/portals/masak2/files/en/Legislation/Regulations/measures.htm 

    [45] Republic of Turkey Ministry of Finance Financial Crimes Investigation Board 

    http://www.masak.gov.tr/media/portals/masak2/files/en/Legislation/Regulations/measures.htm 

    [46] Republic of Turkey Ministry of Finance Financial Crimes Investigation Board 

    http://www.masak.gov.tr/media/portals/masak2/files/en/Legislation/Regulations/measures.htm 

    [47] Republic of Turkey Ministry of Finance Financial Crimes Investigation Board 

    http://www.masak.gov.tr/media/portals/masak2/files/en/Legislation/Regulations/measures.htm 

    [48]Regulation on the Procedures and Principles For Accounting Practices and Retention of Documents by Banks

     http://www.bddk.org.tr/WebSitesi/english/Legislation/8830muhasebe.pdf  

    [49] Republic of Turkey Ministry of Finance Financial Crimes Investigation Board 

    http://www.masak.gov.tr/media/portals/masak2/files/en/Legislation/Regulations/measures.htm 

    [50] Republic of Turkey Ministry of Finance Financial Crimes Investigation Board 

    http://www.masak.gov.tr/media/portals/masak2/files/en/Legislation/Regulations/compliance.htm

    [51] Republic of Turkey Ministry of Finance Financial Crimes Investigation Board 

    http://www.masak.gov.tr/media/portals/masak2/files/en/Legislation/Regulations/compliance.htm

    [52] Republic of Turkey Ministry of Finance Financial Crimes Investigation Board 

    http://www.masak.gov.tr/media/portals/masak2/files/en/Legislation/Regulations/compliance.htm

    [53] Republic of Turkey Ministry of Finance Financial Crimes Investigation Board 

    http://www.masak.gov.tr/media/portals/masak2/files/en/Legislation/Laws/5549.htm

    [55] Egmont Group of FIUs

    http://www.egmontgroup.org/

    [57] Chronology, Republic of Turkey Ministry of Finance Financial Crimes Investigation Board 

    http://www.masak.gov.tr/en/laundering-proceeds-of-crime/chronology.aspx

    [58] International Links, Turkish National Police

    http://www.egm.gov.tr/icerik&under;detay.aspx?id=205

    [59]Legislation, Republic of Turkey Ministry of Finance Financial Crimes Investigation Board 

     http://www.masak.gov.tr/tr/mevzuat/suc-gelirinin-aklanmasi/ulusal-mevzuat.aspx

    [60] Legislation, Republic of Turkey Ministry of Finance Financial Crimes Investigation Board 

     http://www.masak.gov.tr/tr/mevzuat/suc-gelirinin-aklanmasi/ulusal-mevzuat.aspx