Answer ... Turkey has extensive anti-money laundering (AML) and counter-terrorism finance laws – primarily, Law 5549 on the Prevention of Laundering Proceeds of Crime (‘AML Law’). The AML Law requires relevant institutions (including certain financial institutions) to take measures in order to prevent money laundering and terrorist financing. Such measures include:
- carrying out know-your-customer (KYC) procedures;
- notifying suspicious transactions to the authority;
- implementing a compliance programme; and
- appointing a compliance officer.
The main regulatory body that is authorised in this field is the Financial Crimes Investigation Board (FCIB), established under the Ministry of Treasury and Finance.
The most critical AML requirement for fintech companies is the KYC obligation. The KYC obligations under Turkish law requires the user and the financial service provider to be physically present face to face. In general, this does not suit the online business models adopted by many fintech companies. As a result, verification methods carried out online are not adequate, unless a ‘simplified KYC’ option applies. Simplified KYC procedures are available for payment service institutions and e-money institutions. Accordingly, such licensed service providers are not required to conduct customer identification for issuing electronic money and payment services used only for the purpose of purchasing goods and services and not exceeding:
- cash withdrawals in the amount of TRY 300 within the same year;
- if there is no option to reload, TRY 750 for funds stored electronically; and
- if there is an option to reload, total reloading per month of TRY 750 and in all cases a balance of TRY 750.
If these amounts are exceeded or the e-money is used for purposes other than the purchase of goods and services (eg, money transfers), then identity information (ie, name, surname, date of birth, nationality, Turkish identity number and foreign identity number) must be verified through the identity-sharing system database of the Ministry of the Interior – General Directorate of Population and Citizenship Affairs. The e-money top-up must also be executed through a bank account or credit card whose credentials are compatible with those verified during the registration. In this way, no face-to-face KYC is necessary. In other cases, face-to-face identity verification with formal identity documentation will be necessary.
The FCIB has also unofficially announced that it has been working on a legal amendment that would allow for the utilisation of ‘video KYC’ methods (eg, verifying identity via webcams or smart phones).