International Bar Association | Anti-Money Laundering Forum - Turkey

IBA - Anti-Money Laundering Forum

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Turkey

Last updated: 03/04/2014



CENTRAL AUTHORITY FOR REPORTING

The central authority for reporting in Turkey is Mali Suclari Arastirma Kurulu (“MASAK”), the Turkish Financial Crimes Investigation Board, which is a service unit instituted within the Ministry of Finance.

The main function of MASAK is carrying out an ongoing investigation in various business sectors concerning the developments in money laundering and terrorist financing practices for the sake of establishing the most effective methods of counteracting, revealing mechanisms and perpetrators standing behind these offences.

MASAK can undertake or commission investigations in respect of institutions suspected of committing money laundering or terrorist financing offences and convey the obtained information to relevant law enforcement authorities. MASAK also receives suspicious transaction reports (STR) and evaluate the cases reported. Then they form a decision on whether to forward the STR to the relevant public prosecutor for bringing action against money laundering and/or terrorist financing.

Moreover, MASAK is responsible for developing policies, drafting legal bills, guidelines and implementation strategies in accordance with the country’s anti-money laundering and counter terrorist financing policies. It also ensures proper coordination among relevant institutions and organisations by providing a platform for exchange of views and information.

The duties and obligations of MASAK are detailed in Article 19 of the Law no. 5549 on Prevention of Laundering Proceeds of Crime.

MASAK is a member of the Egmont Group since 1998.
OTHER ANTI-MONEY LAUNDERING REGULATOR(S)
Banking Regulation and Supervision Agency (“BRSA”),
Capital Markets Board(“CMB”),
Undersecretariat of Treasury.

HAS THE THIRD EU MONEY LAUNDERING DIRECTIVE BEEN IMPLEMENTED? IF NOT, WHEN IS IT EXPECTED TO BE IMPLEMENTED?

The Turkish regulations and communiqués have not been officially harmonised with Directive 2005/60/EC on the prevention of the use of the financial system for the purpose of money laundering and terrorist financing. However, the Law No. 5549 on Prevention of Laundering of the Proceeds of Crime, reasons that its provisions have been based on Directive 91/308/EEC on prevention of the use of the financial system for the purpose of Money Laundering.

In addition, the Turkish lawmakers see Directive 2005/60/EC as an extended version of the previous directives. In line with this specific authorities have been given to the relevant ministries to implement the extended provisions of the Directive 2005/60/EC. Likewise, the Regulation on Measures for Prevention of Laundering the Proceeds of Crime and Terrorist Financing implements provisions of the Directive 2005/60/EC.

The influence of the European Union is also visible in the expansion of the Turkish AML provisions to include lawyers and accountants, and the subsequent insertion of customer due diligence requirements.

LIST THE LAWS REGARDING ANTI-MONEY LAUNDERING, INDICATING WHICH LAWS ARE APPLICABLE TO LAWYERS.

Laws
Law No. 5549 on Prevention of Laundering the Proceeds of Crime, published in the Official Gazette No. 26323 of 18 October 2006 as amended from time to time (the “Law No. 5549”);
Law No. 3713 – Anti-Terror Law, published in the Official Gazette No. 20843 of 12 April 1991 as amended from time to time;
Law No. 5237 – Turkish Criminal Code, published in the Official Gazette No. 25611 of 12 October 2004 as amended from time to time; and
Law No. 5271 – Criminal Procedure Law, published in the Official Gazette No. 25673 of 12 December 2004.
Law No. 6415 - Law on the Prevention of the Financing of Terrorism, published in the Official Gazette No. 28561 of 16 February 2013.

Council of Ministers’ Decree
Council of Ministers’ Decree Implementing UNSCRs 1267, 1988, and 1989, published in the Official Gazette No. 28791 of 10 October 2013.

Regulations
Regulation on Measures regarding Prevention of Laundering the Proceeds of Crime and Financing of Terrorism, published in the Official Gazette No. 26751 of 9 January 2008, as amended from time to time; (“Regulation on AML Measures”);
Regulation on Money Laundering Offences Investigation, published in the Official Gazette No. 26603 of 4 August 2007, as amended from time to time; and
Regulation on Program of Compliance with Obligations of Anti-Money Laundering and Combating Financing of Terrorism, published in the Official Gazette No. 26999 of 16 September 2008, as amended from time to time.
Regulation on Procedures and Principles regarding Implementation of the Law on the Prevention of the Financing of Terrorism, published in the Official Gazette No. 28663 of 31 May 2013.

Communiqués
General Communiqué on Reporting Suspicious Transactions relating to Financing of Terrorism published in the Official Gazette No. 26693 of 7 November 2007;
Financial Crimes Investigation Board General Communiqué No. 5 on Simplified Due Diligence Measures regarding Money Laundering and Financing of Terrorism, published in the Official Gazette No. 26842 of 9 April 2008 (“General Communique No. 5”);
Financial Crimes Investigation Board General Communiqué No. 6 on Reporting Suspicious Transactions relating to Money Laundering and Financing of Terrorism published in the Official Gazette No. 27010 of 27 September 2008;
Financial Crimes Investigation Board General Communiqué No. 7 on Principles regarding Customer Due Diligence with respect to Money Laundering and Terrorism Financing published in the Official Gazette No. 27072 of 2 December 2008;
Financial Crimes Investigation Board General Communiqué No. 8, published in the Official Gazette No. 27239 of 26 May 2009;
Financial Crimes Investigation Board General Communiqué No. 9 on Simplified Due Customer Due Diligence Measures regarding Money Laundering and Financing of Terrorism, published in the Official Gazette No. 27450 of 2 January 2010; and
Financial Crimes Investigation Board General Communiqué No. 10 amending General Communique No. 5, published in the Official Gazette No. 28826 of 19 November 2013.
ARE VISITING LAWYERS SUBJECT TO LOCAL LAWS REGARDING ANTI-MONEY LAUNDERING, AND, IF SO, TO WHAT EXTENT?

Article 4 (s) of the Regulation on AML Measures extends the scope of application of the Law No. 4208 to lawyers licensed in Turkey, who provide legal assistance on purchase and sale of immovable property and incorporation of, managing and transferring companies, foundations and associations.Legal assistance could be in the form of providing legal advice, representing individuals and legal entities before courts, tribunals or other bodies that have judicial authority, following up of proceedings or preparing any and all documents that is necessary in the course of providing any of these services.

Therefore, foreign lawyers who have decided to work in the country on a permanent basis and who have obtained a license as required by the Law No. 1136 – the Law on Lawyers, shall be subject to the requirements of the Turkish AML laws and regulations.
LIST ANY MONEY LAUNDERING GUIDANCE FOR LAWYERS (FOR EXAMPLE, LAW SOCIETY OR BAR ASSOCIATION GUIDELINES) CURRENTLY IN PLACE.

The AML guidance for lawyers can be found in the General Communiqué on Reporting Suspicious Transaction relating to Financing of Terrorism.

IS THE LAW SOCIETY/BAR ASSOCIATION INVOLVED IN SUPERVISING OR ENFORCING COMPLIANCE WITH ANTI-MONEY LAUNDERING REGULATIONS?

No.

DESCRIBE CLIENT DUE DILIGENCE REQUIREMENTS, INCLUDING WHEN IT MUST BE UNDERTAKEN BY LAWYERS.

Further to the changes introduced by virtue of the Amendment of 2 January 2010 to the Regulation on AML Measures, lawyers are required to undertake client due diligence (CDD) when trading immovables, incorporating, managing and transferring companies, foundations and associations.

CDD for lawyers

Lawyers must identify and verify the identity of their clients or persons acting on their behalf when:
Establishing a business relationship, regardless of the value of the transaction;
the value of the transaction, including when the transaction is carried out in several operations which appear to be interrelated, amounts to or exceeds the value of 20.000 TL;
the value of electronic money transfer, including when the transfer is carried out in several operations which appear to be interrelated, amounts to or exceeds the value of 2.000 TL;
a doubt has arisen as to the completeness and accuracy of the identification data previously obtained, regardless of the value of transaction; and
the intended transaction is inconsistent with the previous business relationship.

CDD shall be undertaken prior to the establishment of a business relationship or execution of the transaction in question. The obligated parties, including lawyers, shall also obtain information on the scope and aim of the intended transaction prior to the establishment of a business relationship.

Required information, Chapter 3 of the Regulation on AML Measures

The information which must be obtained depends on the nature of the client and so:
for natural persons – name, surname, place and date of birth, nationality, type and number of the identity card, address, sample of signature, telephone and fax number, e-mail, information about job and profession (if applicable); additionally, for Turkish citizens – the names of mother and father and T.R. identity number shall be received;

for legal entities registered with the trade registry –the trade name of the legal entity, trade registry number, tax identification number, field of activity, full address, telephone and fax number; and e-mail, name, surname, place and date of birth, nationality, type and number of the identity card and sample of signature of the person authorised to represent the legal entity, if applicable; additionally, for Turkish citizens – the names of mother and father and T.R. identity number shall be received;

for associations and foundations – the name of the association or foundation, its aim, log number, full address, telephone and fax number, e-mail; the name, surname, place and date of birth, nationality, type and number of the identity card and sample of signature of the person authorised to represent the association or foundation, if applicable; additionally, for Turkish citizens – the names of mother and father and T.R. identity number of the person authorised to represent the association or foundation shall be received;

for foreign associations and foundations–determination of the identity of branches and overseas offices of foreign associations and foundations is based upon the documentation obtainable from the Ministry of Internal Affairs of Turkey.

Pursuant to Article 15 of the Regulation on AML Measures,in case of any doubts as to the authenticity of documents obtained from the client, lawyers shall either contact the institutions or persons who issued the relevant documents or shall refer to any other competent authorities in order to verify it.

Record-Keeping Obligations

Once the CDD information has been obtained and verified, legible photocopies, electronic images of the documents or distinctive information pertaining to the documents must be registered and retained for a period of 8 years.

DOES YOUR COUNTRY FOLLOW A RISK-BASED APPROACH TO CLIENT DUE DILIGENCE BY LAWYERS?

Yes.

ARE THERE ENHANCED DUE DILIGENCE MEASURES FOR CERTAIN TYPES OF CLIENTS, FOR EXAMPLE, POLITICALLY EXPOSED PERSONS?

Enhanced due diligence (EDD) is prescribed in the following circumstances:

Transactions Calling for Special Attention

Article 18 of the Regulation on AML Measures requires the application of EDD for:

(i) complex and unusually large transactions, and

(ii) transactions that appear to have no legitimate or reasonable economic purpose.

When undertaking any such transaction, the obligated parties shall take necessary measures to obtain adequate information on the purpose of the transaction in question. They shall then keep the records and documents referring to any such information for the purpose of presenting them to the relevant authorities upon request.

Taking Precautions against Technological Risks

Development of new technologies is associated with higher levels of risk of financing of terrorism and money laundering. Therefore, Article 20 of the Regulation on AML Measures requires that special attention must be paid to transactions that do not require face-to-face contact. These include:

(i) Depositing cash in bank accounts,

(ii) Withdrawing cash,

(iii) Electronic money transfers.

Relations with countries posing higher risk of money laundering

Article 25 of the Regulation on AML Measures states that special attention is required when establishing business relationships with residents, natural and legal persons or organisations without legal personality from the countries identified as posing higher risks of money laundering. Accordingly, the obliged persons, including lawyers, shall collect and register as much information as possible about the purpose and the nature of any transaction that appears to have no legitimate or reasonable economic purpose.

ARE THERE SIMPLIFIED DUE DILIGENCE MEASURES FOR CERTAIN TYPES OF CLIENTS, FOR EXAMPLE, LISTED COMPANIES?

Application of Simplified Due Diligence (SDD)

Article 26(1)(b) and (d) of the Regulation on AML Measures allows SDD when:
transactions are carried out between financial institutions on behalf of themselves;
a client is a public administration or quasi-public professional organisation, being a part of general administration under the Law No. 5018 on Public Financial Management and Control;
establishing a business relationship with a group of clients for purposes of making contractual salary payments to such clients;
transactions related to pension contracts, pension schemes and life insurance contracts;
transactions where the customer is a public company listed on a regulated stock exchange.

The application of SDD does not preclude the obligation to submit STR to MASAK as set out in Article 27 of the Regulation on AML Measures. Thus, SDD shall not apply in cases where the client is under a suspicion of committing money laundering and/or terrorist financing offences.

Scope of SDD

The scope, limits and nature of SDD to be followed by the obliged persons, including lawyers, has been determined by MASAK in Article 2 of the Communiqué No. 5 SDD and includes:
ID identification;
Identification of the beneficiary owner;
Special care for the legal entities;
On-going monitoring of the status and transactions of the client.

This information can be obtained either from the client directly or from other publicly available sources, third parties with whom the customer had previous business relationship or from other reliable sources. The information obtained shall be registered and retained either as a hard copy or in electronic form, following Article 2.1, para 4 of the Communiqué No. 5.

Limits on SDD

Article 2.1, paragraph 3 of the Communiqué No. 5 imposes limitations on the application of SDD. Moreover, the obliged parties are obliged to evaluate, separately for every transaction, whether there is any scope for abuse in terms of money laundering and terrorist financing, as set out in Article 2.1, paragraph 5 of the Communiqué No. 5.

No Verification of Companies Listed on the Stock Market and Public Institutions

The obliged persons, including lawyers, shall register any information and any relevant authority certificates for any individual authorised to undertake transactions on behalf of the client, where the client is a public administration or a professional institution. The obliged persons, including lawyers, are not obliged to verify the address and other contact details of the individual.

Moreover, if the client is a company listed on the regulated stock exchange, the necessary information can be registered without the need for verification. However, the IDs and confirmation that the individual possesses the authority to act on behalf of these legal entities shall still be determined in accordance with the Regulation on AML Measures.

ARE LAWYERS PERMITTED TO RELY ON THIRD PARTY DUE DILIGENCE? IF YES, PLEASE DESCRIBE.

Lawyers are not permitted to rely on third party CDD. Under Article 21 of the Regulation on AML Measures, only financial institutions are allowed to rely on third party CDD.
WHEN IS A LAWYER UNDER AN OBLIGATION TO REPORT SUSPICIOUS TRANSACTIONS?

Definition of suspicious transaction

The term “suspicious transaction” is defined in Article 27(1) of the Regulation on AML Measures, as “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 obligated 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.”

Obligation to submit Suspicious Transactions Report (STR)

In accordance with the Law No. 5549, any suspicious transaction which have been either carried out or attempted to be carried out by the obligated parties on behalf of their clients, shall be reported to the Presidency of MASAK. Accordingly, STR shall be submitted, especially if there is any doubt as to the legality and the legitimacy of the assets that are subject to the transaction in question.

Obligation of periodical reporting

The obligated parties, including lawyers, shall report to MASAK the transactions, which they are parties or intermediaries to, exceeding the amount determined by the Ministry of Finance. Additionally, under Article 34 (4) of the Regulation on AML Measures, the Ministry of Finance has the authority to identify:
the types of transactions subject to periodical reporting,
reporting procedures and reporting frequency,
obligated parties excluded from periodical reporting, and
other implementation principles and procedures.

DOES ATTORNEY/CLIENT PRIVILEGE AND/OR DUTIES OF CONFIDENTIALITY PROVIDE A DEFENCE OR PARTIAL/TOTAL EXCEPTION TO THE REQUIREMENT TO REPORT SUSPICIOUS TRANSACTIONS?

The Regulation on AML Measures does not specifically address problems related to client confidentiality or legal privilege. However, according to Article 4 (s) of the Regulation on AML Measures, lawyers are bound by the requirements of the relevant AML laws and regulations only in so far as those requirements do not breach the client’s right of defence and/or other principles set out in other laws.

DOES LOCAL LAW PROVIDE ANY CRIMINAL AND/OR CIVIL INDEMNITY TO A LAWYER WHO HAS REPORTED A SUSPICIOUS TRANSACTION?

Lawyers who have submitted STR shall not be subject to any criminal or civil sanctions, following Article 29 (4) of the Regulation on AML Measures.

ONCE A SUSPICIOUS TRANSACTION REPORT HAS BEEN FILED, IS A LAWYER ALLOWED TO PROCEED WITH THE LEGAL ADVICE/TRANSACTION, AND, IF SO, MUST CONSENT FROM AUTHORITIES BE OBTAINED FIRST?

The Regulation on AML Measures does not provide any guidance on whether lawyers should proceed with legal advice once STR has been filed.

IS THERE A TIPPING-OFF PROHIBITION? IF YES, PLEASE DESCRIBE.
There is a tipping-off prohibition under Article 4 of the Law No. 5549. Additionally, Article 29 of Regulation on AML Measures states that the obligated parties shall not disclose to anyone, including the parties of the transaction that the suspicious transaction has been or will be reported. The tipping-off prohibition includes any foreign clients and contacts lawyers may have abroad. The prohibition does not include disclosure of information to the examiners assigned for inspection of AML obligations and information provided to the courts in the course of a trial.

DESCRIBE ANY RESTRICTIONS ON ACCEPTING A NEW CLIENT.
Lawyers shall not engage in a business relationship with a new client if they cannot identify the customer or if the information obtained regarding the purpose of the business relationship is insufficient.

ARE THERE ONGOING MONITORING REQUIREMENTS FOR EXISTING CLIENTS? IF YES, PLEASE DESCRIBE.
Identity Determination in Successive Transactions

If there is a business relationship, information related to the person’s identity collected for the purposes of the identity determination, shall be stored and compared with the identity data obtained in any subsequent transactions.

If a doubt arises with respect to the accuracy of the information obtained, it must be verified. Under Article 16 of the AML Regulation, this can be done by checking the originals of the identity documents submitted for verification or by comparing the information contained in the original identity documents with copies certified by notary. In case of a business relationship, the party’s address can be verified by reviewing an invoice that has been issued in the last three months for utility services requiring subscription such as electricity, water, gas and telephone. Alternatively, the address can be confirmed by submitting a document issued by a public institution, or by submitting other documents as deemed appropriate by the Ministry of Finance. Lawyers must either keep copies of any such documents confirming clients address or register the relevant information.

DESCRIBE ANY OTHER WAYS IN WHICH LAWYERS ARE AFFECTED BY ANTI-MONEY LAUNDERING LEGISLATION.
Pursuant to Article 13 of the Law No. 5549, lawyers may be liable to pay an administrative fine of TL 8,796 payable to the Presidency of MASAK if they do not comply with the statutory requirements to:
determine the client’s identity,
keep the MASAK informed on ongoing basis, or
notify the MASAK of any suspicious transactions.

Additionally, lawyers may be subject to imprisonment from 1 year to 3 years and additionally may be subject to monetary penalty equal to 5,000 days[1] for:
Making disclosure to unauthorised third parties of any information regarding STR;
Refusal to provide information and/or documents to the relevant supervisory personnel or to MASAK;
Failure to keep the record of or to disclose upon request the relevant transaction information for a period of eight years.

HAVE LAWYERS IN YOUR JURISDICTION BEEN IMPLICATED IN MONEY LAUNDERING, INCLUDING ANY TYPE OF COMPLAINT, ARREST OR PROSECUTION?
So far, no complaint, arrest or prosecution has been issued against any lawyer with respect to money laundering offence.

HAS THE FINANCIAL ACTION TASK FORCE (FATF) CONDUCTED A MUTUAL EVALUATION OF THIS COUNTRY, AND, IF SO, WHAT WERE THE FINDINGS CONCERNING LAWYERS’ COMPLIANCE WITH THE FATF 40+9 RECOMMENDATIONS?
Yes, the FATF released a Mutual Evaluation Report for Turkey on Anti-Money Laundering and Combating the Financing of Terrorism in February 2007. The FATF strongly recommended that Turkey should introduce AML/CFT additional measures for lawyers and implement systems for monitoring and ensuring the compliance of all designated non-financial businesses and professionals with AML/CFT requirements.

The FATF also recommended that MASAK should begin providing feedback in response to STRs. The report suggested that MASAK should issue further guidance to legal professionals regarding when and how to report suspicious transactions. It should also outline what steps should be implemented to ensure any internal AML measures are effective.

The FATF issued a statement on Turkey after the second FATF Plenary meeting of FATF-XXIV which was held in Paris on 20-22 February 2013. In its statement, the FATF referred to the Law on the Prevention of the Financing of Terrorism, which was adopted by the Turkish Grand National Assembly and signed into law on 15 February 2013. FATF stated that the new law addressed many of the shortcomings identified in Turkey’s terrorist financing offence and created the legal basis for the freezing of terrorist assets. The FATF welcomed this significant step made by Turkey, which improved the country’s compliance with the international standards but indicated that in spite of this positive step, there still remain a number of on-going shortcomings in the Turkish counter-terrorist financing regime and Turkey must address these shortcomings in order to reach a satisfactory level of compliance with the FATF standards.

FATF issued two public statements afterwards analysing Turkey’s position in terms of taking steps towards improving its CTF regime. In its public statement issued on 18 October 2013, FATF recognised the steps Turkey has continued taking towards improving its CFT regime including by issuing a Council of Ministers’ Decree implementing UNSCRs 1267, 1988, and 1989 and encouraged Turkey to implement an adequate legal framework for identifying and freezing terrorist assets under UNSCRs 1267 and 1373. Similarly, in its public statement issued on 14 February 2014, FATF welcomed Turkey’s progress in largely complying with the FATF standard on criminalisation of terrorist financing and repeated that it encourages Turkey to address its remaining concerns regarding Turkey’s framework for identifying and freezing terrorist assets under UNSCRs 1267 and 1373.

[1]In Turkey, there is a monetary unit per day set out under the Turkish Criminal Code that is periodically updated. Currently this monetary unit ranges from TL 20 to TL 100. The exact unit value that will apply to a specific entity will be calculated based on particulars of each case including financial condition of the entity. A monetary penalty which is measured in days refers to the multiplication of the monetary unit per day by the number of days the relevant laws provide.