Türkiye Removed From Gray List, India Recognized for Its AML Efforts, and Kuwait Urged to Have Better Money Laundering Control Measures: FATF Updates

On Friday, an international financial watchdog committed to securing the global economic system against money laundering and terrorist financing, the Financial Action Task Force (FATF), removed Türkiye from its gray list, handing over a code of confidence to the government due to their efforts of enhancing anti-money laundering (AML) systems to prevent money laundering processes.

A Paris-based firm published its latest report, citing the country’s new name and the acronym for anti-money laundering and combating the financing of terrorism. It said, “The FATF welcomes Türkiye’s significant progress in improving its AML/CFT regime.”  The organization said the country had strengthened its AML and CFT compliance programs to overcome the system loopholes highlighted by the watchdog, which caused Türkiye to land on FATF’s gray list in October 2021.

According to FATF’s key findings, the country has multiple unregistered money-transferring service providers, alleged involvement in sanctions evasion, weak oversight over Non-Profit Organizations (NPOs) linked to major financial crimes, and insufficient resources to prosecute criminal proceedings.

In addition to these shortcomings, the watchdog discovered that the country’s banking, construction, and property sectors were vulnerable to illicit financing of UN-sanctioned states and groups.

In its 2024 findings, the watchdog organization concluded that Turkey is “no longer subject to the FATF’s increased monitoring process” but that it “should continue to work with the FATF to sustain its improvements in its AML/CFT system, including by continuing to ensure its oversight of the NPO [nonprofit organization] sector is risk-based and in line with the FATF standards.”

It’s good news for Türkiye’s government, and the finance minister, Mehmet Simsek, posted on its social media, “We did it,” along with the country’s flag emoji, the moment when the decision was announced. Turkish Vice President Cevdet Yilmaz said: “With this development, international investors’ confidence in our country’s financial system has become even stronger. The decision will positively affect the financial sector and the economy.”

The FATF’s announcement of removing Türkiye from its gray list will help the government boost the country’s economy after years of high inflation, local currency depreciation, and inconsistent foreign investment levels.

Like Türkiye, India has also gained an outstanding outcome in FATF’s 2023-2024 Mutual Evaluation.  This report was adopted during the Singapore plenary meeting from June 26 to June 28, where the watchdog placed India in the “regular follow-up” category, a distinction shared by only four other G20 countries. This credit is a significant achievement for the country, followed by its tireless efforts to enhance AML and CFT measures. According to the Finance Ministry release, FATF has praised our collaboration in developing measures to mitigate risks emerging from money laundering and terrorist financing.

India’s effective measures include transitioning from a cash-based to a digital economy, limiting the threat of financial crimes, implementing JAM ( Jan Dhan, Aadhaar, Mobile) Trinity, increasing financial inclusion, and strengthening cash transaction compliance while creating transparent channels to trace digital transactions to reduce money laundering.

The international watchdog’s recognition highlights the Indian government’s efforts in taking rigorous and future-proof AML and CFT measures. Lastly, the country’s outstanding rating has enhanced its capacity to help other gray-listed countries improve their measures against terror financing and money laundering.

Unlike India and Türkiye, FATF has highlighted significant improvements in Kuwait’s AML and CFT measures. The FATF has addressed the government to understand the risk of crimes, improve investigation and prosecution abilities, and freeze illicit funds linked to money laundering or terrorist financing. These findings were identified during the watchdog’s sixth and final general session. Due to the shortcomings of the current AML and CFT mechanism, the country is under enhanced monitoring for such crimes.

While explaining the FATF’s enhanced monitoring process, Dr Mohammed Bouzbar, a Criminal Law Professor at Kuwait University, commented that it is a way of overseeing countries with significant loopholes in their money laundering detection laws or measures. This procedure ensures that the specified countries take effective measures to enhance their efforts to combat money laundering and terrorist financing.

“If a country fails to take the necessary measures within the specified time frame, it may face additional actions from FATF, including being placed on the gray or black list,” Dr. Bouzbar noted. “This could significantly impact the country’s reputation and ability to engage with the international financial system.”

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