Money laundering thrives in Turkey

Money laundering thrives in Turkey
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Former MASAK Vice President highlights global trends in financial crime and the need for international collaboration.

By Anil Cengiz Bolukbas

Money laundering is again in the spotlight because of new information and developments, revealing a significant problem that threatens the integrity of the Turkish economy. Former MASAK VP Ramazan Basak stresses the importance of global collaboration and firm action against criminal networks to tackle rising crime rates.

Money laundering, encompassing profits from illegal activities worldwide, is well-known to those monitoring Turkey's economic operations.

The methods of money laundering

Reporting enormous sums of money to the Financial Crimes Investigation Board (MASAK) is mandatory if you deal with them. The reporting threshold in Turkey is 20,000 dollars. Reporting is not required for amounts below this threshold. Yet, when dealing with more significant amounts, there are multiple ways to launder money.

Tracking money becomes easier with solid international collaboration, warns Basak. A popular technique involves 'dividing' funds, where amounts below $20,000 are split and placed in various bank accounts. Another commonly used method consists of using offshore accounts in locations such as the Isle of Man and Malta, where the source of funds is not inspected. Individuals and companies frequently use sham transactions to launder money in this place.

Turkey and international norms

Despite adhering to Basel standards and accepting inspections by FATF, Turkey's banking system still needs help. The Asset Peace agreements have significant implications, despite efforts by BDDK and MASAK to prevent dirty money influx.

Turkey's Regular Asset Peace legislation has been significant, starting in 2008 and particularly after the July 15, 2016 coup attempt. Turkey was placed on FATF's grey list in October 2021, as the organization had concerns about the country's efforts to combat money laundering and terrorist financing.

The FATF has persistently warned Turkey, stressing its geographic position as a crossroads for illegal drug, human, fuel, and arms trafficking, contributing to significant money laundering activities. Despite legal frameworks, the real challenge lies in implementation, with FATF reports highlighting Turkey's inadequate investigations and reporting of suspicious financial activities.

A global issue of massive proportions

Former MASAK Vice President Ramazan Basak revealed that around $300 trillion is laundered globally while discussing the global and national landscape of money laundering. The UN reported $1.8 trillion, but it's believed that $7 trillion hides in offshore centers. Basak emphasizes that this is evidence of the issue's massive scope, both worldwide and in Turkey.

Basak pointed to the universal nature of this problem, recalling investigations and sanctions against significant banks for money laundering. For instance, HSBC faced a $1.9 billion fine, ING was fined 776 million euros, and Deutsche Bank underwent scrutiny for lax oversight of suspicious transactions, implicating a staggering 230 billion euros in shady dealings.

Basak criticized Turkey's lack of essential legal reforms. He suggested that misinterpretations of the 'Asset Peace' may have inadvertently facilitated money laundering. He noted that non-compliance with FATF guidelines, such as not enacting legislation on weapons of mass destruction and needing more regulations for public officials' financial dealings, has contributed to Turkey's grey-listing.

Addressing illegal activities is necessary, according to Basak, to effectively combat money laundering. Our approach involves zero tolerance for illicit activities and strict enforcement against criminal organizations. In addition, he pointed out the reallocation of resources from general financial oversight to specific political issues, leaving other areas exposed.

Money laundering on the rise in the Turkish drug market

Highlighting Turkey's role as a transit country for drugs, Basak pointed out that recent operations show Turkey's transition from merely a transit country to a market itself, further fueling money laundering activities.

The allegations surrounding Dilan-Engin Polat have shone a spotlight on the pervasive issue of money laundering, underscoring the urgent need for decisive action and reform in Turkey to safeguard its economy and uphold international financial standards.