Turkey removed from money laundering ‘grey list’
Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
A global financial watchdog has removed Turkey from its “grey list” of countries that have lapses in anti-money laundering and counterterrorism financing policies in a boon to Ankara’s efforts to turn its economy around.
The Financial Action Task Force announced the decision on Friday after Turkey was added to the grey list in October 2021. Jamaica was also removed from the list.
The FATF’s move is a significant victory for Turkish finance minister Mehmet Şimşek, who has led a sweeping economic turnaround since his appointment following President Recep Tayyip Erdoğan’s re-election last year.
Şimşek has sought to court international investors who fled Turkey’s markets in recent years by bolstering financial rules and regulations and unwinding unorthodox policies that ignited a years-long economic crisis.
“With this development, the confidence of international investors in the financial system of our country has been further strengthened,” said Turkish vice-president Cevdet Yılmaz, who has played a significant role in the country’s new economic programme.
A 2021 IMF study found that a grey listing had “a large, significant negative effect” on a country’s capital inflows, meaning Friday’s move could drive a further move into Turkish assets.
Turkey’s economic policy overhaul, which has included large increases in taxes and interest rates, has already driven a significant influx of foreign capital: international investors have poured $8.8bn into the country’s local-currency government debt market this year.
“Turkey strengthened the effectiveness of its [anti-money laundering and counterterrorism financing] regime to meet the commitments in its action plan regarding the strategic deficiencies that the FATF identified in October 2021,” the watchdog said on Friday.
FATF president Raja Kumar pointed in particular to Turkey’s progress in pursuing complex money laundering and terrorism financing investigations as leading reasons for its decision to remove the country from the grey list. In one high-profile example, Turkey last year launched a sprawling probe into alleged money laundering and tax evasion by social media influencers.
One of the FATF’s major areas of concern was also addressed this week when parliament passed new cryptocurrency regulations that require companies dealing in digital assets to register with the capital markets regulator. The country has one of the world’s most active crypto markets, but a lack of regulation had prompted concerns that local exchanges could facilitate money laundering or terrorism financing.
However, Turkey, which has not participated in western sanctions over Moscow’s war against Ukraine, remains under pressure from its US-led allies to prevent local companies facilitating Russian access to military-linked goods.
The US has in recent months imposed sanctions on numerous Turkish companies that Washington says are providing Russia with western technology that it uses on the battlefield.
The FATF also on Friday added Venezuela and Monaco to its grey list. The United Arab Emirates was removed from the list in February, with the body citing the Gulf state’s progress in battling illicit fund flows.
The watchdog also reiterated its warning on the “serious threats posed by [North Korea’s] illicit activities related to the proliferation of weapons of mass destruction and its financing”.
