Money laundering 'gray list': Turkey removed by financial crimes watchdog

• The Financial Action Task Force removed Turkey from its "gray list," indicating confidence in the country's economic turnaround efforts.
• The 2021 report by the FATF identified sectors such as banking, construction, and property in Turkey as vulnerable to the financing of terrorist groups like Islamic State and al-Qaeda.

The Financial Action Task Force, an international organization that monitors money laundering and illegal cash flows, removed Turkey from its "gray list" on Friday, indicating confidence in the country's economic recovery efforts.

The FATF has acknowledged Turkey's substantial advancements in enhancing its AML/CFT framework, as stated in its most recent report.

The FATF identified "deficiencies" in Turkey's AML/CFT regime, which prompted the country to enhance its effectiveness.

The deficiencies in the system included FATF concerns over unregistered money transfer services, insufficient resources dedicated to terrorist financing investigations, alleged involvement in sanctions evasion, lack of oversight on high-risk sectors used for money laundering such as banking and real estate, and insufficient oversight of nonprofit organizations that could be used for terrorist financing, among others.

The 2021 report by the FATF identified sectors such as banking, construction, and property in Turkey as vulnerable to financing of United Nations-sanctioned groups, including the Islamic State and al-Qaeda.

The FATF's increased monitoring process no longer applies to Turkey, but the watchdog organization recommends that Turkey continues to collaborate with the FATF to maintain its progress in its AML/CFT system, particularly in overseeing the nonprofit organization sector in a risk-based and FATF-compliant manner.

According to a Google translation from Turkish, Turkey's finance minister, Mehmet Simsek, wrote "We did it" on social media platform X, along with a Turkish flag emoji, after the government welcomed the news of the decision.

The decision will have extremely positive consequences for the financial sector and the economy, as Turkish Vice President Cevdet Yilmaz stated, strengthening international investors' confidence in our country's financial system.

The FATF's announcement is expected to positively impact Turkey's economic recovery following years of high inflation, a declining domestic currency, and fluctuating foreign investment.

Moody's ratings agency's industry practice lead, Mohamed Daoud, explained the potential positive effects of the new designation.

The Turkish government and economic sectors have made significant progress in combating money laundering and terrorist financing, leading to Turkey's removal from the FATF Grey List, according to Daoud.

"The anticipated growth is predicted to enhance Turkey's global standing, possibly increasing foreign investment and ties with European and American organizations."