Enforcement of prudential standards in Turkish banking law
| DOI | https://doi.org/10.1108/13685201111147559 |
| Date | 19 July 2011 |
| Published date | 19 July 2011 |
| Pages | 254-265 |
| Author | Nusret Cetin |
| Subject Matter | Accounting & finance |
Enforcement of prudential
standards in Turkish banking law
Nusret Cetin
Capital Markets Board of Turkey, Ankava, Turkey
Abstract
Purpose – The success of banking regulations depends on their effective and efficient enforcement.
Therefore, the penalties or sanctions for failures to comply with prudential regulatory requirements
shall clearly be specified in the law. The aim of this paper is to describe and discuss the enforcement of
prudential regulations in Turkish banking law.
Design/methodology/approach – The paper explains the necessity of the prudential standards in
banking regulation and their enforcement, and elaborates the Turkish Banking Act to analyze the
sanctions provided for the enforcement of prudential requirements.
Findings – The Turkish Banking Act comprises many of the contempora ryprudential standards for
banks. It also establishes an effective sanctioning regime to ensure the implementation of these
standards. The sanctions in the Banking Act can be broadly classified as institutional and personal
sanctions. Institutional sanctions consist of three categories: prompt corrective actions, revocation
of license and closure, and financial penalties. Personal sanctions, on the other hand, comprise
management overhaul and loss of job, temporary prohibition from employment in the banking sector,
financial penalties, criminal liability, and civil liability of managers and controlling shareholders.
Originality/value – This paper systematically analyzes enforcement of prudential standards in
Turkish banking law, and aims to introduce the Turkish system to international scholars.
Keywords Banking supervision,Prudential regulation, Law,Enforcement, Prompt corrective actions,
Sanctions, Turkey
Paper type Viewpoint
Introduction
Turkey has faced many financial and banking crises during the last two decades and,
as a result national economy, particularly the banking system got seriously damaged.
However, it will not be wrong to argue that crises may create some opportunities for
policy makers to establish a safe, sound and strong financial system. Turkish policy
makers also recognized this chance, and issued a new Banking Act No: 5411 in 2005 to
regulate and supervise Turkish banking system[1]. The Banking Act was in fact
designed to work for the purpose of finding solutions to problems that arose during the
banking crises. Thus, by imposing regulatory requirements and supervisory practices,
it aims to create a strong and safe banking system, which is vital for national economy.
The aim of this article is to describe and discuss the enforcement of prudential
regulation imposed by the Banking Act. In this context, general information regarding
the banking supervision and enforcement of prudential regulation will first be given
and then the enforcement of prudential standards will further be discussed within the
Turkish Law framework.
The current issue and full text archive of this journal is available at
www.emeraldinsight.com/1368-5201.htm
The opinions expressed herein are the author’s own personal opinions and do not represent
Capital Markets Board of Turkey’s view in any way.
JMLC
14,3
254
Journal of Money Laundering Control
Vol. 14 No. 3, 2011
pp. 254-265
qEmerald Group Publishing Limited
1368-5201
DOI 10.1108/13685201111147559
To continue reading
Request your trial