Turkey on Friday welcomed a decision by an international watchdog to remove it from a so-called “ gray list ” of countries that have not fully implemented measures to fight money laundering and terrorism financing.
The announcement by the Financial Action Task Force in Singapore could bolster foreign investments in Turkey, which is trying to rebound from a deep economic downturn.
“We succeeded,” Turkish Finance Minister Mehmet Simsek wrote on the social media platform X, as the decision was being announced.
Vice-President Cevdet Yilmaz said: “With this development, international investors’ confidence in our country’s financial system has become even stronger. The decision will have extremely positive consequences for the financial sector and the economy.”
Being on the watchdog’s gray list can scare away investors and creditors, hurting exports, output and consumption. It also can make global banks wary of doing business with a country.
FATF President T. Raja Kumar, who is finishing his two-year term, said Turkey was taken off the gray list because of the “substantial progress” that it has made.
Kumar said a FATF team visited Turkey in May and confirmed that the country had taken “substantive steps” to improve its anti-money laundering regime, addressing all the items in its action plan.
As examples he cited Turkey’s complex investigations into and prosecutions of money laundering and terrorist financing. Turkey was placed on the list in 2021.
“We will with determination continue our fight against organized crime organizations, the traffickers of poison (drugs), the immigrant smuggling rings, the money-laundering criminal groups, and especially against the financing of terrorism and of those traitors,” Turkey’s Interior Minister Ali Yerlikaya wrote on X.
Jamaica was also removed from the gray list, while Monaco and Venezuela were added, Kumar said. The United Arab Emirates was taken off the list earlier this year.
A 2021 IMF study found that a grey listing had “a large, significant negative effect” on a country’s capital inflows, meaning Friday’s move could drive a further move into Turkish assets.
“However, Turkey, which has not participated in western sanctions over Moscow’s war against Ukraine, remains under pressure from its US-led allies to prevent local companies facilitating Russian access to military-linked goods.
The US has in recent months imposed sanctions on numerous Turkish companies that Washington says are providing Russia with western technology that it uses on the battlefield”, commented Adam Samson at FT.
“The good news around Turkey, and the reforms from (Finance Minister Mehmet) Simsek just keep on coming,” said Tim Ash, a strategist at Bluebay Asset Management.
Turkey’s business world also hailed the decision. Rifat Hisarciklioglu, the head of Turkish Union of Chambers and Commodity Exchanges described the removal as a “positive” development.
“It confirms that the Turkish economy is progressing in the right direction,” he wrote on X.
According to Bloomberg Intelligence, an acceleration of capital flows would help reduce the Turkish economy’s external vulnerabilities, support the lira and combat elevated inflation.
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