Has the grey list danger for Turkey been eliminated?

In FATF evaluations conducted on combating money laundering and preventing the financing of terrorism, Turkey has drawn attention in recent years with critical reforms and implementation steps. Having been removed from the FATF grey list in February 2024, Turkey is currently awaiting the completion of the 5th Round Mutual Evaluation. According to experts, the regulations implemented to date and inter-institutional cooperation have significantly reduced the likelihood of the country being placed back on the grey list.

Former President of the Financial Crimes Investigation Board (MASAK) Osman Dereli assessed the situation, stating, "Turkey's shortcomings regarding legislation and implementation have been largely addressed. Unless a serious problem remains, there is no risk of re-entering the grey list."

As part of the latest evaluation, an FATF delegation conducted on-site inspections in Turkey last November. During the visit, comprehensive meetings were held with public institutions, as well as private sector representatives including financial institutions, brokerage firms, insurance companies, and crypto service providers. The evaluations specifically addressed financial intelligence production, compliance processes of financial institutions, and inter-institutional cooperation. The report to be prepared as a result of these inspections is expected to be discussed at the FATF Plenary in June.

Dereli noted that Turkey has made significant progress compared to previous evaluation periods. During the fourth-round process, the country was placed on the grey list due to deficiencies identified in technical compliance and implementation effectiveness, but it subsequently strengthened its adherence to criteria through comprehensive improvements. Increasing the powers of the Financial Crimes Investigation Board, raising administrative fines, and the activation of judicial units aimed at preventing the laundering of proceeds of crime were among the cornerstones of this process.

Turkey is now compliant or largely compliant with most of the FATF's forty technical recommendations. Thanks to legal and institutional updates made for areas previously considered deficient or non-compliant, the issue of non-compliance has been almost entirely eliminated. These regulations have brought about significant developments in many areas over the last two years, from the tracking of cases to practical applications.

Stating that "the FATF no longer examines only legislation on paper, but also effectiveness in practice," Dereli said that these developments are the most important factor that will ensure positive results in the fifth-round evaluation.

The evaluation report to be presented at the FATF Plenary in June appears likely to present a largely positive picture in light of the structural steps Turkey has taken in recent years and its increased implementation capacity. Experts in the field point out that sustainable success is possible only through the coordination of all relevant stakeholders, primarily the financial sector, rather than just state institutions. Due to the dynamic nature of the process, spreading a culture of compliance to all layers of society remains important.

Finally, the increased familiarity of the fifth-round evaluation team with the legal systems of countries has also paved the way for Turkey's situation to be handled in a more balanced and fair manner. In light of all these developments, the risk of Turkey being placed on the grey list has been almost entirely eliminated.