Turkey Set to Toughen AML Laws on Crypto Asset Platforms

Richard M. November 2, 2023 4 minute read

Turkey is designing new and stricter obligations to prevent crypto-asset platforms from money laundering in order to be removed from the international watchdog, FATF, increased AML monitoring list.

International regulatory authority Financial Action Task Force (FATF) added Turkey to the “grey list” in 2021 for inadequate measures against money laundering and terrorist financing in the country. According to the FATF report on Turkey’s compliance system, the country’s financial institutes and law enforcement agencies did not adhere to AML derivatives. Turkey is now upgrading its regulations to adhere to these international standards and overcome the deficiencies in their transactional system. With the strict laws on virtual assets service providers, Turkey strives to be delisted by FATF for its increase in monitoring measures

According to the Turkish government, they are also taking steps to ensure that financial institutions are equipped to detect and prevent money laundering activities. The country is setting up an anti-money laundering centre to oversee the implementation of these regulations and ensure that financial institutions and digital-asset providers comply with AML standards.

The Turkish Finance Minister, Mehmet Simsek, claimed the country’s financial system complies with all 40 FATF recommendations. Simsek stated, “the only remaining issue within the scope of technical compliance is the work related to crypto assets. We will submit a law proposal on crypto-assets to the parliament soon. After that, there will be no reason for Turkey to stay on that grey list if there are no other political considerations.”

But till now, the deficiencies in the Turkey AML screening process have raised a concern about the global financial ecosystem. Whilst the country’s law enforcement agencies are dealing with the shortcomings in their financial institutes, the watchdog identified loopholes in the crypto exchange platforms. These deficiencies need urgent updating to prevent crypto assets from being used by bad actors for money laundering and terrorist financing.

However, Turkey is determined to draft a legal framework that regulates virtual assets and regain the trust of the international community to boost their economy. The country is set to launch its rigid obligation, especially for the trading crypto-asset platforms. Whilst the country’s regulatory authorities are still crafting the specific details of the proposed law, their intentions are clear to issue the regulatory obligations, which comply with international standards on cryptocurrency regulations.

The international community demanded that Turkey strengthen their financial system and prevent terrorist financing, including proliferating weapons of mass destruction through cryptocurrency. By submitting the proposed regulations to the parliament, Turkey intends to meet the FATF’s standards in this critical time. Once Turkey complies with all international standards, the watchdog may not have any reason to keep it on the “grey list.”