Critical FATF meeting approaches: Will Turkey be removed from the grey list?
While Monaco, home to the world's highest concentration of millionaires and billionaires, is expected to be added to the grey list on June 28, there is growing curiosity about whether Turkey will be removed from it.
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Monaco, which hosts the world's highest number of millionaires and billionaires, is reportedly at risk of being added to the "grey list" at the meeting taking place next week due to a lack of sufficient progress in combating illicit financial flows.
The Financial Action Task Force (FATF) Plenary will be held in Singapore from June 26-28.
According to a report by Sözcü, it is expected that Monaco will be added to the grey list following the meeting, while Turkey is expected to be removed.
Countries added to the list are subject to closer monitoring, a situation that can make foreign investors more cautious about doing business there. A 2021 International Monetary Fund report found that countries on the grey list experienced a "large and statistically significant reduction in capital inflows."
TURKEY EXPECTED TO BE REMOVED FROM THE LIST
Various topics will be on the agenda of the closed-door plenary session starting next week. As reported by Bloomberg last month, Turkey is expected to be removed from the grey list.
Reports evaluating the systems currently in place in India and Kuwait will also be discussed.
The FATF has held meetings with Turkish officials to address developments regarding money laundering and illicit financing.
A source familiar with the meetings, which lasted several days, stated that the "on-site" visit was conducted to evaluate Turkey's progress in combating money laundering and terrorist financing.
The source in question had indicated that the team's report would form the basis for the decision to be taken at the FATF plenary meeting on June 28.
Minister of Treasury and Finance Mehmet Şimşek stated in February that they had completed the technical work with the FATF to remove Turkey from the grey list. Şimşek said, "The process of exiting the grey list will be completed with the on-site inspection to be held in June."
WHAT HAPPENED?
The FATF, which evaluates the performance of countries in combating international financial crimes, placed Turkey on what is known as the grey list in 2021 due to lagging efforts in the fight against money laundering and terrorist financing.
It is unclear which government, private sector, or civil society institutions or officials the FATF team met with in Turkey. In addition to Turkey, 20 other countries are currently on the FATF grey list.
International Monetary Fund (IMF) research shows that being placed on the grey list can lead to strained relations with foreign banks and investors. Therefore, if Turkey is removed from the grey list in June, it could lead to an appreciation of the Turkish Lira and strengthen TL-denominated assets.
HOW IS A COUNTRY REMOVED FROM THE LIST?
The Paris-based FATF, established over thirty years ago at the initiative of the G7, has approximately 40 members, including the United States and China, as well as the European Commission and the Gulf Cooperation Council.
Through the grey and black lists, the group aims to combat money laundering and terrorist financing by deterring investments in non-compliant countries.
To avoid the grey list designation, a significant majority of FATF members must agree that a country has made sufficient progress since the beginning of its evaluation period.