The Financial Crimes Investigation Board ("MASAK") has amended the Regulation on Measures to Prevent Money Laundering and Financing of Terrorism as published in the Official Gazette dated 1 May 2021 ("Regulation").
Among others, payment service providers, e-money issuers, financing, factoring companies, asset management companies, financial leasing companies, brokers; precious metals-jewelry traders and brokers fall within the scope of the amendment.
According to MASAK's Guide to Crypto Asset Service Providers published on 05 May 2021 ("Guide"), the term of "crypto asset service provider" is defined as institutions that mediate the trading of crypto assets. In this regard, crypto asset exchange platforms are subject to the rules and requirements defined under AML & CTF legislation.
In addition, Article 4 of the Regulation on Measures on Anti-Money Laundering and Counter-Terrorism Financing stipulates that crypto asset service providers shall be considered as an "obliged party" if they provide services in Turkey even if they were outside of Turkey.
In other words, if; (i) the exchange platform is accessible in Turkey, (ii) CASP allows money transfers from Turkey and provides Turkish language support, and (iii) residents in Turkey can make transactions on the Platform, the laws of Turkey will be applicable for such crypto trading activities.
Obligations under AML&CTF Regulations:
- Identification of traders (KYC Process):CASPs must determine the identities of platform users before a transaction is executed. If a user executes certain transactions on the exchange platform on behalf of a third party, the relevant service provider must also identify that third party.
There are certain criteria according to which a user or a third party must be identified, i.e., the value of the transaction, the type of the business relationship accuracy or adequacy of the personal information and etc.
To identify the traders, CASPs must collect certain information and documents specified in the AML & CFT regulations, such as
- For natural persons:
- Personal identifying credentials;
- Type of identity document (e.g. passport, driver's licence, etc.) and ID number;
- Contact details;
- Sample signature; and
Please note that the CASPs must verify the identity of the person by requesting the identity document(s) and/or passport.
- For legal entities registered with the trade
- Corporate details;
- Contact details;
- Phone number;
- Personal identifying of the company's authorised representative
- Monitoring customer status and transactions:CASPs must: continuously monitor, within the scope of the permanent business relationship, whether the transactions performed by their customers are compatible with the customers' profession, business activities, business history, financial status, risk profile and funding sources; and keep information, documents and records about their customers up to date.
- Retention and submission of documents:CASPs must retain all documents, including suspicious transaction reporting forms, books and records regarding their obligations and transactions for eight years from the date of issuance and all identification documents for 8 (eight) years from the last transaction date and present these to the competent authority if required.
- Suspicious transaction reporting:If there are any information, suspicion or reasonable grounds to suspect an unlawful acquisition or unlawful purpose of use of the assets that are the subject of a transaction carried out by or through a CASP, the CASP must notify the transaction to the MASAK within 10 (ten) business days at the latest from the date on which the suspicion arose regarding the transaction, and immediately for urgent cases.
Along with the Suspicious Transaction Reporting Guide for Crypto Asset Service Providers released on 18 April 2022, the MASAK has provided crypto-asset service providers with extensive examples of suspicious transactions.
- Periodic reporting:CASPs must report transactions to which they are parties or intermediaries that exceed a threshold determined by the Ministry of Treasury and Finance to the MASAK. However, we would like to note that the Ministry of Treasury and Finance has not yet determined an amount in this regard. Therefore, the application of this rule for CASPs is currently limited.
- Information and documents:When requested by
the MASAK or examiners, CASPs must provide:
- all kinds of information, documents and related records in all formats; and
- all information and passwords are necessary to fully and accurately access and retrieve such information.
CASPs must retain all documents, books and records and identification documents in all formats for 8 (eight) years from the date of issue, the last record date or the last transaction date; and must submit these on request. The starting date of the retention period for documents relating to customer identification is the closing date of the account.
- E-Notification:According to the legislation,
the notifications required under the law may be submitted
electronically and responses may be requested electronically,
notwithstanding the procedures relating to electronic notification.
Electronic notifications will be deemed complete when they reach
the recipient's side. The MASAK is authorized:
- to construct new technical infrastructure or use existing technical infrastructure to require the use of electronic addresses for notification purposes and the provision of electronic responses; and
- to determine the procedures and principles relating to electronic notifications and responses.
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.