Statute 4208 concerning the prevention of money-laundering was passed by the Grand National Assembly on November 13th and went into effect with its publication in issue 22822 of the official gazette on 19 November 1996. This circular discusses the new law in detail, dwelling on a number of important practical issues.
A. OBJECT OF THE LAW
The purpose of the act is to prevent the laundering of illicit funds.
B. DEFINITION OF ILLICIT FUNDS
Article 2 of the law defines "illicit funds" to be money, all negotiable instruments, goods, or revenues that have been secured as a result of the commission of any of the acts referred to in the laws cited below as well as any and all material benefits and values that are secured as a result of converting such money, instruments, goods, or revenues into one another (including their exchange from one currency unit to another).
C. CRIMINAL ACTS THAT ARE CONSIDERED TO GIVE RISE TO ILLICIT FUNDS
1. The following offenses set forth in Statute 1918 concerning the prohibition and prosecution of smuggling:
a) Importing any substance or article into Turkey without clearing it through customs;
b) Importing into or exporting from Turkey any substance or article whose importation into or exportation from Turkey is prohibited;
c) Knowingly transporting smuggled articles from any location within the country to another location within the country, or purchasing, selling, or storing them, or offering them for sale, or acting as an intermediary in their purchase or sale;
d) Importing, transporting, concealing, selling, knowingly accepting, purchasing, using, or consuming any substance subject to a state monopoly without being entitled or authorized to do so;
e) Using or selling any substance that has been imported duty-free or with reduced duties under particular laws for specific purposes or any government-supplied substance that is subject to duty or monopoly in any way other than that for which it was allocated, or knowingly purchasing the same, or receiving the same when one has no legal right to do so or receiving more than one is legally entitled to, or to fill out, have certified, or certify declarations pertaining to such matters.
2. The offenses set forth in Statute 6136 concerning firearms and knives (offenses involving illegal trade in weapons).
3. The offenses set forth in Statute 2238 concerning the receipt, storage, and transport of organs and tissues (offenses involving illegal trade in organs and tissues).
4. The offenses set forth in Statute 2863 concerning the protection of cultural and natural properties (offenses involving smuggling of antiquities and of protected natural properties and the illegal trade therein)
5. The following acts of tax evasion as set forth in subparagraphs 2 and 3 of article 344 of the Tax Procedures Code (Statute 213):
a) Drawing up documents that are false or misleading in terms of their contents or causing a tax loss by knowingly making use of them;
b) Fraudulently altering documents, drawing up documents and copies that do not conform to their originals, or knowingly causing a tax loss by making use of documents that have been fraudulently altered as well as documents and their copies that have been drawn up in a manner not conforming to their originals.
6. Offenses against the sovereign personality of the state as set forth in the Turkish Penal Code (Statute 765) and, from the same law:
a) Acts of ransoming as set forth in article 179;
b) Acts of blackmail as set forth in article 192;
c) Illegal traffic in and transport of explosives as set forth in article 264;
d) The acts of counterfeiting as set forth in articles 316, 317, 318, 319, 322, and 325;
e) The acts of fraud as set forth in articles 332, 333, 335, 339, 341, 342, 345, and 350;
f) Acts related to trade in narcotics as set forth in articles 403, 404, and 406;
g) Acts related to prostitution as set forth in articles 435 and 436;
h) Acts related to looting, banditry, and kidnapping as set forth in articles 495, 496, 498, 499, and 500;
i) Acts of swindling and fraudulent bankruptcy as set forth in articles 504 and 506.
D. THE CRIME OF MONEY-LAUNDERING
The law defines the crime of money-laundering has having occurred whenever illicit funds that have been secured as a result of the commission of any of the acts referred to above
1. are taken advantage of by those securing them for the purpose of acquiring legitimacy for the funds;
2. are acquired by others even though it was known the funds had been secured illicitly;
3. are found in one's possession;
4. are used by those securing them or by others;
5. are subjected to an alteration of source, or nature, or possessorship, or ownership;
6. are concealed, or are moved across national borders, or their movement across national borders is concealed;
7. are subjected to an alteration of source or location with the aim of aiding someone who has committed any of the above-cited offenses to avoid the legal consequences of his acts, or are laundered through transfers, or are the object of attempts to hinder the identification of illicit funds.
E. EMPOWERED MINISTRY AND UNITS
The law empowers the Ministry of Finance to take action in combating money-laundering and for this purpose a "Department of the Fiscal Offense Investigation Board". This board will carry out its duties of investigating and studying money-laundering offenses through fiscal inspectors, auditors, revenue comptrollers, sworn bank auditors, Treasury comptrollers, and Capital Market Board experts. Within this framework these authorities are empowered to demand information and documents on matters falling within the scope of their duties, to perform investigations and examinations, to monitor and scrutinize performance, and for this purpose to examine any and all manner of documents.
F. OBLIGATION TO PROVIDE INFORMATION AND DOCUMENTS
Public agencies and organizations as well real persons and legal entities are obliged to adduce all documents and information that may be demanded by those empowered by the law. Under article 12 of the law, those who fail to comply with this obligation are to be punished by prison sentences of from six months to one year and by fines of from twelve million to one hundred twenty million liras.
G. PENALTIES FOR THE CRIME OF MONEY-LAUNDERING
Those committing acts of money-laundering are to be penalized by prison sentences of from two to five years and by fines equal to twice the amount of money laundered. Goods and assets (including any interest their on) falling within the scope of illicit funds will be confiscated. If the goods etc themselves cannot be seized, recourse will be had to property assets corresponding to the same value.
If illicit funds have been secured as a result of terrorist crimes or of the illegal movement of any substance or article whose importation into or exportation from Turkey is prohibited by law or if the offense is committed with the aim of securing resources for the commission of terrorist crimes, the minimum prison sentence that can be imposed is four years.
The law also provides for a doubling of penalties depending upon the professional positions of those committing the offenses and of the manner in which an offense is committed.
Situations that necessitate this doubling of penalties are the following:
- An offense is committed by those who have formed an organization with the purpose of laundering illicit funds as well as by those managing such an organization and by its members
- An offense is committed by a civil servant or public officer in the course of his duties or by anyone working in any entity engaged in activities governed by the Banks Act (Statute 3182), the Insurance Control Act (Statute 7397), the Financial Leasing Act (Statute 3226), the Law concerning the Protection of the Value of the Turkish Currency (Statute 1567), the Capital Market Act (Statute 2499), and laws and regulations governing the business of lending money or pertaining to principles and procedures concerning the establishment, activities, and winding-up of private finance houses.
- An offense is committed along with the use of force, threats, or weapons.
If offenses related to illicit funds are committed within a corporate entity, the same penalties will be imposed on those in positions of authority who committed the acts and, in addition, the corporate entity will be levied a fine of from five hundred million liras to five billion liras.
H. STATUTE OF LIMITATIONS
The statute of limitations on the investigation of offenses related to the laundering of illicit funds is ten years.
I. PRECAUTIONARY MEASURES
In situations where there is serious circumstantial evidence concerning money-laundering, justices of the peace (during the preliminary investigation phase) and courts (during the trial phase) are authorized to freeze all entitlements and claimsincluding the contents of safe-deposit boxesheld by banks and non-bank financial institutions as well as by other real persons and legal entities; to completely or partially void powers of disposition thereto; to order the seizure of goods, negotiable instruments, cash, and other assets and have them placed in safekeeping; and to take other measures concerning such entitlements and claims.
In situations where any delay may appear to entail risks, public prosecutors may also decide to have entitlements and claims frozen.
J. IMPLEMENTATION AND REGULATIONS
Implementation of the law is to be governed by regulations that are to be issued within six months of the date on which the law is published.
These regulations will cover the following matters:
1. Provision of information
2. Establishment of identity
3. Methods of investigation and examination
4. Suspicious transactions
5. Identification of benefits and assets that may be the subject of laundering.
Please do not hesitate to contact us if you need any additional information regarding the matters discussed here.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
For further information contact Mustafa Camlica, Tax Manager on tel: +90 212 232 1210, fax: +90 212 230 8231, or e-mail firstname.lastname@example.org or enter a text search 'Arthur Andersen' and 'Business Monitor'.