Turkey is reportedly drafting fresh regulations to govern crypto assets in an effort to convince the Financial Action Task Force (FATF) — an international organization responsible for combating financial crimes — to remove it from a “grey list” of nations that have not done enough to combat money laundering and terrorist financing. The new Interior Minister Ali Yerlikaya is spearheading a campaign to rid Turkey off organized crime rings, the presence of which has raised questions by multinationals and global fund managers about the investability of the country.
The FATF placed Turkey on its grey list in 2021. According to a report, during a discussion with a parliamentary commission on Oct. 31, Turkish Finance Minister Mehmet Simsek said a FATF report determined that Turkey adhered to all but one of the 40 standards set by the watchdog.
Simsek reportedly stated that the sole outstanding matter for technical compliance is related to crypto assets. He cited plans to propose a crypto assets law to parliament to exit the grey list but did not specify the legal changes.
The Group of Seven, or G7, advanced economies established the FATF to safeguard the international financial system. It cautioned Turkey in 2019 about significant deficiencies in procedures for freezing assets associated with terrorism and the proliferation of weapons of mass destruction.
The Turkish Presidential Annual Program for 2024, released on Oct. 25 in the Official Gazette of the Republic of Turkey, sets the objective of completing cryptocurrency regulations in the country by the end of 2024. Article 400.5 in the comprehensive 500-page document outlines the intended efforts to establish clear definitions for crypto assets, potentially subjecting them to taxation in the future.
The document also intends to legally define crypto asset providers like cryptocurrency exchanges. However, it does not provide further specifics on the upcoming regulatory framework. By December 2022, the Central Bank of the Republic of Turkey had successfully conducted the initial trial of its central bank digital currency, the digital lira. It has expressed intentions to pursue further testing into 2024.
June 2023 FATF report on Turkey confirms the progress made:
The three follow-up reports and subsequent re-ratings since the 2019 assessment of Türkiye’ s AML/CFT framework highlight the progress that Türkiye has made to strengthen its measures to combat money laundering and terrorist financing.
Türkiye now only has one Recommendation left rated PC (R.15) and no recommendations rated NC.
Türkiye will report back to the FATF on progress achieved in improving the implementation of its AML/CFT measures in its 5th round mutual evaluation.
New Interior Minister gets tough on organized crime
President Erdogan seems determined to crack down on organized crime in Turkey, perhaps because he grasps the importance of Turkey being removed from FATF gray list in terms of attracting quality FDI.
Interior Minister Ali Yerlikaya has reaffirmed his commitment to eradicating criminal organizations and bolstering the nation’s security.
Over the past three months since he assumed office, Yerlikaya announced that a total of 1,767 suspects had been detained as a result of 92 operations conducted against organized crime groups, with 430 of them subsequently arrested.
One of his key objectives is to transform Türkiye into a region that is inaccessible and off-limits to drug traffickers, Yerlikaya said, equating drug-related crimes to terrorism. In the last 90 days, authorities have detained 66,013 suspects in 53,929 drug-related operations, leading to the arrest of 5,966 individuals, he informed.
In a significant blow to international organized crime, Turkish authorities have successfully dismantled the Comanchero criminal syndicate, apprehending 37 suspects in Istanbul. The Australia-based group, led by Hakan Ayik, was known for its global operations, engaging in a multitude of criminal activities ranging from drug trafficking and murder to armed robbery, arson, and kidnapping.
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