|Kayra Üçer||Yesim Api Samli|
Turkey criminalised money laundering in 1996 by enacting Law No. 4208 on the Prevention of Money Laundering, which established the Financial Crime Investigation Board (MASAK), the main administrative body monitoring relevant institutions' compliance with anti-money laundering (AML) requirements and the war against terror. A new type of crime – laundering assets arising from a crime – entered the Turkish Criminal Code in 2005, by which time two separate laws defined the crime of money laundering: Law No. 4208 and the Turkish Criminal Code.
As this created difficulties for practical implementation, to improve Turkish AML legislation's compliance with the Financial Action Task Force 40+9.
Recommendations and the EU legislation on anti money-laundering, Law No. 5549 on Preventing the Laundering of Criminal Proceeds (AML Law) overhauled existing legislation in 2006.
2008 saw the enactment of the Regulation on Measures to Prevent the Laundering of Criminal Proceeds and the Financing of Terrorism (Regulation on Measures) and the Regulation on the Program of Compliance with the Obligations to Combat Money Laundering and the Financing of Terrorism (Compliance Regulation).
While the two regulations explain the process for dealing with money laundering and financing terrorism, certain difficulties still occur in implementing the procedures they describe. MASAK thus periodically issues certain other regulations for clarification.
The AML Law has introduced systemic innovations, defining liable persons and their liabilities, and separating applicable legislation from administrative and judicial sanctions. In contrast to Law No. 4208, the AML Law also includes measures to prevent the financing of terrorism.
Liable persons and liabilities
The AML Law and the Regulation on Measures encompass a group of liable persons that includes real persons, legal entities and unincorporated entities acting as intermediaries to certain types of businesses. Applicable AML legislation broadens this group by including: (i) sole-practitioner attorneys whose activities are limited to the sale and purchase of real property or incorporation, management and acquisition of companies, foundations and associations; (ii) sole-practitioner certified general accountants and CPAs; (iii) independent audit institutions; (iv) sports clubs; and (v) persons involved with antiques, artefacts or artistic works. In January 2010, the list was made more comprehensive to include branches, agencies, representatives and similar units affiliated with a liable person.
Unlike Law No. 4208, the AML Law does not itself define all of the liabilities, but the relevant secondary legislation defines them in detail.
Customer identification verification
While most of the AML legislation's customer verification obligations apply to all liable persons, certain obligations – such as monitoring customer profiles and transactions, preventing technological risks, monitoring wire transfers and monitoring relationships with risky countries – are carried out solely by financial institutions, and simplified customer identity verification obligations apply to transactions among such institutions.
In general, the customer identification obligation falls into two categories:
- cases requiring verification of customer identity regardless of monetary value; and
- cases requiring verification if the transaction exceeds a certain monetary limit.
Considering that each life insurance policy or wire transfer could be a money-laundering or terror-financing tool, the legislature imposed obligations different from those of Law No. 4208: that any wire transfers or multiple affiliated wire transfers amounting to or exceeding TRL2,000 ($1,410), and any transactions or multiple affiliated transactions related to life insurance amounting to or exceeding TRL5,000, will be subject to customer identity verification. In any event, any transactions or multiple affiliated transactions amounting to or exceeding TRL20,000 will be subject.
The AML Law introduced the concept of "recognition of the actual beneficiary" (required under the Financial Action Task Force Recommendations), whereby liable persons are obliged to confirm the transaction's actual beneficiary. An actual beneficiary can be an individual that controls or owns a customer – whether such customer is an individual or a legal entity – it can also be an individual on behalf of whom the transaction is carried out.
Suspicious transaction reporting
Liable persons must report suspicious transactions – deposits, withdrawals, transfers, and so on – of large monetary sums with no plausible explanation, regardless of monetary limit. In summary, if there is any reason to suspect that a transaction is conducted or attempted by or through a liable person, stems from illegal or terrorist activity, or is used for illegal or terrorist activity or by terrorist organisations, this must be reported to MASAK. Liable persons must not disclose suspicious transactions to anyone other than authorised bodies or the court. Violation of such confidentiality duty may result in imprisonment and judicial penalty.
The AML Law also requires a liable person to report transactions to which it is a party, or in which it acts as an intermediary, exceeding an amount determined by the Ministry of Finance. However, until the Ministry of Finance determines such amount, liable persons are obliged to report only suspicious transactions.
Liable persons are required to establish risk management systems, together with training, internal audit and control systems that will help achieve full conformity with the obligations under the AML legislation. The AML Law also requires liable persons to appoint a compliance officer, obliging liable persons whose internal regulations do not feature such requirement (brokerage houses, for example).
Providing information and documentation
Liable persons must provide any and all relevant information, documents and records to MASAK, and enable full and accurate access to such instruments. A liable person cannot refuse to provide requested information merely by referring to restrictions under specially applicable legislation.
The AML Law refers solely to administrative and judicial sanctions for failure to comply with AML legislation, but defers to the Turkish Criminal Code in criminal activities. Although the AML Law provides for imprisonment of persons who violate its provisions on keeping suspicious transaction reporting confidential, and providing, retaining and submitting information and documents, the Turkish Criminal Code essentially regulates the money laundering offence and the sanction of imprisonment for these violators.
Kayra Üçer and Yesim Api Samli