Financial crime watchdog removes Turkey from money laundering ‘grey list’

Financial crime watchdog removes Turkey from money laundering ‘grey list’

As the sun sets, a ferry crosses the Golden Horn, with the Suleymaniye Mosque and the city of Istanbul, Turkey in the background.

The Financial Action Task Force (FATF), an international organization focused on combating money laundering and illicit financial activities, has decided to remove Turkey from its “gray list” of countries requiring special monitoring. The decision, taken on Friday, represents a significant vote of confidence for Turkey in its economic recovery efforts.

In its latest report, the Paris-based FATF acknowledged Turkey’s significant progress in enhancing its anti-money laundering (AML) and counter-terrorist financing (CFT) measures. The report commended Turkey for addressing the shortcomings identified in the FATF’s October 2021 monitoring report.

The 2021 report highlighted several concerns, including unregistered money transfer services, insufficient resources to investigate terrorist financing, alleged involvement in sanctions evasion, and inadequate oversight of high-risk sectors such as banking and real estate. It also found insufficient regulation of nonprofits that could potentially be used to finance terrorism.

In its 2024 conclusions, the FATF concluded that Turkey no longer requires enhanced monitoring, but should continue to work with the FATF to further improve its AML/CFT system. This includes ensuring risk-based supervision of the non-profit sector in line with FATF standards.

The Turkish government welcomed the news. Finance Minister Mehmet Simsek expressed his satisfaction on the social media platform X, writing, “We did it,” alongside an emoji of the Turkish flag. Turkish Vice President Cevdet Yilmaz noted that the decision would significantly increase international investors’ confidence in Turkey’s financial system, with positive implications for the financial sector and the economy as a whole.

The FATF announcement is expected to help Turkey’s economic recovery, which has been challenged by high inflation, a weak currency and inconsistent levels of foreign investment.

Mohamed Daoud, head of industry practices at Moody’s, highlighted the positive impact of the new designation. He said that Turkey’s removal from the FATF grey list recognizes the country’s significant improvements in combating money laundering and terrorist financing. This development is expected to enhance Turkey’s international reputation and potentially increase foreign investment and relations with European and US institutions.