The Turkish Capital Markets Board (the
"CMB") recently initiated criminal
proceedings under Article 109/2 of the Capital Markets Law (the
"CML") against a foreign individual for
the unauthorized marketing of derivatives in Turkey. This is the
first such prosecution since clarification of the rules this past
The offering of certain financial products and services is a
licensed activity in Turkey. Whether the marketing or otherwise
soliciting of financial products and services without a license
constituted a violation of the licensing requirements had long been
an open question. The CMB's Communiqué on Investment
Services No. III-37.1 (the
"Communiqué"), which entered into
force in July 2014, finally clarified this issue. It sets forth
that if a foreign institution provides investment services to a
Turkish resident who has initiated the communication, the foreign
institution is not required to obtain a license in Turkey, provided
it does not engage in marketing, promotion or solicitation. A
foreign institution hoping to avoid any licensing requirement in
Turkey must not: (i) set up an office in Turkey or
a website in Turkish, or (ii) engage in any marketing, promotion or
solicitation of its investment services, other financial services
Providing investment services in Turkey without the required
licenses may result in two to five years' imprisonment, and a
judicial fine of up to TRY 1,000,000 (approx. USD 457,000). In
addition, both the foreign institution operating in Turkey without
a license and its representatives active in Turkey are subject to
an administrative fine of up to TRY 280,091 (approx. USD 128,000).
If the foreign institution earns a profit from these activities,
the administrative fine is at least double the profit
The CMB's first prosecution of a foreign individual
demonstrates that it is proactively pursuing unlicensed foreign
individuals and legal entities engaging in these activities in
Turkey. To avoid liability, foreign financial services and products
providers should update their internal policies to ensure that
their sales force does not engage in activities which could be
considered the unlicensed marketing of financial products and
services in Turkey.
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On April 5th, 2016, the Department of Justice ("DOJ") announced the Foreign Corrupt Practices Act Enforcement Plan and Guidance ("Guidance") which aims to ensure greater accountability for Foreign Corrupt Practices Act ("FCPA") violations and provide greater transparency for companies with regard to mitigation.
On February 18th, 2016 Turkey finally ratified the Council of Europe Convention on Laundering, Search, Seizure and Confiscation of the Proceeds from Crime and on the Financing of Terrorism Agreement.
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