Anti‐money laundering law of Turkey and the EU: an example of convergence?
| Published date | 19 July 2011 |
| Date | 19 July 2011 |
| DOI | https://doi.org/10.1108/13685201111147577 |
| Pages | 279-296 |
| Author | Umut Türkşen,İsmail Ufuk Mısırlıoğlu,Osman Yükseltürk |
| Subject Matter | Accounting & finance |
Anti-money laundering law
of Turkey and the EU: an example
of convergence?
Umut Tu
¨rks¸en, I
˙smail Ufuk Mısırlıog
˘lu and Osman Yu
¨kseltu
¨rk
University of the West of England, Bristol, UK
Abstract
Purpose – This paper critiques the recent anti-money laundering (AML) legislation in Turkey and
the European Union (EU) in order to determine whether there is convergence between them. Given the
fact that Turkey is a candidate country for the EU membership, harmonisation of Turkish and the EU
AML frameworks has become increasingly important. These AML laws pose important
responsibilities for the financial and legal sectors.
Design/methodology/approach – In order to facilitate the evaluation process, the AML regimes
examined are compared in regards to various aspects, such as criminalisation of money laundering,
recording and reporting obligations, enforcement and sanctions mechanisms. Findings from activity
reports from the regulatory bodies as well as semi-structured interviews conducted with relevant
professionals are incorporated into the discussion.
Findings – It can be argued that the Turkish AML regime is in line with the EU AML framework.
However, there is a need for government authorities to coordinate their efforts with the relevant
independent regulatory professional bodies that represent the liable professionals in Turkey. While it
is evident that each national regime in the EU has adopted a unique AML framework, minimum
standards provided by international (e.g. the Financial Action Task Force) and regional (e.g. EU)
instruments have been the main driving force behind all national laws.
Practical implications – The involvement of professional regulatory bodies will enhan ce
competence to monitor compliance and provide training mechanisms and guidance for liable
professionals pertaining to AML regulations.
Social implications – Effectiveness of AML initiatives will enhance with improved cooperation and
communication between the executive, law enforcement agencies and businesses. This will improve
the reporting of suspicious financial activities and subsequent enforcement.
Originality/value – The paper provides an up-to-date account of the Turkish legal regime pertaining
to AML and demonstrates its shortcomings whilst assessing it against the EU AML framework. The
findings of the study contribute to the existing literature and shed light on areas for reform.
Keywords Turkey, Moneylaundering, European union, Financialcrime, Liability, Harmonization
Paper type General review
1. Introduction
The current economic environment with its advanced information and communication
technology provides potential benefits and opportunities for the global community.
However, these opportunities also bring their own challenges with them. Among these
challenges include financial crime which can take many forms of malfeasant activity.
Majority of the proceeds from these crimes are camouflaged to make it look legitimate
and this process is generally referred to as “money laundering”. Money laundering is an
increasing cause of concern for the international financial community. Monetary volume
and seriousness of this crime cannot be determined accurately (Robinson, 1995, p. 4)
however, the International Monetary Fund estimates it to be 2-5 per cent of global gross
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AML law of
Turkey
and the EU
279
Journal of Money Laundering Control
Vol. 14 No. 3, 2011
pp. 279-296
qEmerald Group Publishing Limited
1368-5201
DOI 10.1108/13685201111147577
domestic product (GDP). Another study indicates that the amount of money laundered
on an annual basis ranges somewhere between $300bn and $1,000bn ( Johnson and Lim,
2004). Spalek (2001) claims that the amount is approximately $500bn. Maylam (2002)
estimated that the annual figure could be as much as $1.5trn. The UK Government has
estimated that the amount of money laundered annually ranges from £19bn to £48bn
(Harvey, 2005). Arguably, these estimates are inaccurate because they often represent
only a percentage of the shadow or underground economy (Yeandle et al., 2005, p. 15).
Similarly, the exact amount of money laundering in Turkey is unknown, yet the illegal
proceeds involved of in money laundering referrals from the Turkish Financial Crimes
Investigation Board (MASAK) to the public prosecutors between 1997 and 2006 was
more than $1.7 billion[1] (Financial Action Task Force (The FATF, 2007)). Moreover, the
average size of the informal economy, as a per cent of official gross national income in the
year 2002, in Turkey is 32.1 per cent, which is above the OECD average of 18 per cent
(Schneider, 2002). Our semi-structured interviews conducted with relevant professionals
also confirm that ML is a common problem in Turkey.
Money laundering and other forms of financial crime pose serious social and
economic consequences not only for individual countries but also for the international
community in general. As the dominant actors in international transactions, financial
institutions and their systems are the first to get affected. This in turn jeapordises the
socio-economic development of the territories in which these financial institutions
operate. The preferred medium for laundering the illicit funds is often the legitimate
financial institution or professionals (Masciandaro, 1999; The FATF, 2007; Turkish
Financial Crimes Investigation Board – MASAK, 2006). One of the reasons for this trend
is the efficiency and low cost of financial transactions undertaken by these institutions.
Liable persons, such as bankers, lawyers and accountants, inevitably find
themselves in the midst of financial activities and thus have roles in detection,
prevention and reporting of such illegal acts. The conduct and responsibilities of these
professions are regulated by law. First, this article examines and critiques anti-money
laundering (AML) legislation and policies in the European Union (EU) and Turkey.
Second, it aims to establish the level of convergence between the two regimes.
2. Turkish money laundering regulations
(a) Overview
In Turkey, the recognition of money laundering as a crime and the subsequent AML
legislation date back to 1980s. Besides being a national socio-economic concern,
combating money laundering effectively has a particular importance in Turkey’s
objective as a candidate country for EU accession. History also reveals that Turkey has
consistently supported AML initiatives at international level. For instance, Turkey is a
member of The Egmont Group of Financial Intelligence Units (n.d.)[2] as wells as the
FATF which was established in 1989 by the G-7 countries and now has 32 member
states along with two regional/international organisations as members. The Vienna
Convention against Illicit Traffic in Narcotic Drugs and Psychotropic Substances 1988,
the United Nations Agreement Against Organized Crimes across the Border (Palermo
Convention) 2000 and the European Council Convention on Laundering, Search,
Seizure and Confiscation of the Proceeds from Crime 1990 were also ratified by Turkey
on 21 September 1990, 26 February 2003 and 6 June 2004, respectively[3] (Okuyucu,
2009, p. 92).
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