As the sun sets, the ferry sails across the Golden Horn with the Suleymaniye Mosque and the city of Istanbul, Turkey, in the background.
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The Financial Action Task Force, an international watchdog dedicated to combating money laundering and illicit financial flows, on Friday removed Turkey from its “grey list” of countries requiring special monitoring, giving a major vote of confidence to the country amid its financial crisis-hit economic reform efforts.
“The FATF welcomes the significant progress made by Turkey in improving its anti-money laundering and countering the financing of terrorism (AML/CFT) regime,” the Paris-based organization wrote in its latest report, using the Turkish government’s spelling of its country’s name and the acronym for Anti-Money Laundering and Combating the Financing of Terrorism.
She said Turkey had strengthened the effectiveness of its anti-money laundering and counter-terrorist financing regime to address the “deficiencies” identified by the Financial Action Task Force in its October 2021 supervisory report.
These shortcomings included FATF concerns about unregistered money transfer services, insufficient resources allocated to terrorist financing investigations, alleged involvement in sanctions evasion, lack of oversight of high-risk sectors used for money laundering such as banking and real estate, and inadequate oversight of non-governmental organizations. Profitability that can be used to finance terrorism, among other things.
In its 2021 report, the FATF found that sectors such as banking, construction and real estate in Turkey are vulnerable to illicit financing of groups subject to UN sanctions such as the Islamic State and Al Qaeda.
The watchdog concluded in its 2024 findings that Turkey “is no longer subject to the FATF’s increased monitoring process,” but should “continue to work with the FATF to maintain its improvements to its AML/CFT regime, including by continuing to ensure that its supervision of the NPO sector is risk-based and consistent with FATF standards.”
The Turkish government welcomed the news, with its Finance Minister Mehmet Simsek writing on social media platform
Turkish Vice President Cevdet Yilmaz said: “With this development, international investors' confidence in our country's financial system has become stronger. The decision will have very positive consequences for the financial sector and the economy.”
The FATF announcement is likely to come as a boost to Turkey's economic transformation efforts after years of high inflation, devaluation of the local currency and inconsistent levels of foreign investment.
Mohamed Daoud, head of industry practice at Moody's, described the positive impact that the new rating is likely to have.
“Turkey’s removal from the FATF grey list is a recognition of the significant progress made by the Turkish government and various economic sectors in strengthening its fight against money laundering and terrorist financing,” Dawoud said.
“This development is expected to enhance Turkey’s reputation internationally, and potentially enhance foreign investment and relations with European and American institutions.”
