ARTICLE
23 March 2021

Changes To Capital Movements Circular

EA
Esin Attorney Partnership

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Esin Attorney Partnership, a member firm of Baker & McKenzie International, has long been a leading provider of legal services in the Turkish market. We have a total of nearly 140 staff, including over 90 lawyers, serving some of the largest Turkish and multinational corporations. Our clients benefit from on-the-ground assistance that reflects a deep understanding of the country's legal, regulatory and commercial practices, while also having access to the full-service, international and foreign law advice of the world's leading global law firm. We help our clients capture and optimize opportunities in Turkey's dynamic market, including the key growth areas of mergers and acquisitions, infrastructure development, private equity and real estate. In addition, we are one of the few firms that can offer services in areas such as compliance, tax, employment, and competition law — vital for companies doing business in Turkey.
The Central Bank of the Republic of Turkey introduced amendments to the Capital Movements Circular on March 16, 2021.
Turkey Finance and Banking

Recent Development

The Central Bank of the Republic of Turkey introduced amendments to the Capital Movements Circular on March 16, 2021.

What's New? 

Turkish Account Banks' Monitoring of Money Transfers

Prior to the amendment, as explained in our Client Alert dated May 4, 2018, Turkish banks were required to review the content of SWIFT messages transmitted regarding FX transfers from abroad to a Turkish resident's account in order to identify whether the FX transfer is a loan utilized by the Turkish resident.  The latest amendment expands the SWIFT message review requirement for Turkish banks to include TRY transfers from abroad. Further, as explained in our other Client Alert dated February 19, 2019, Turkish banks are required to obtain the receiving company's written declaration and the substantiating information and documents in order to determine whether unidentified FX transfers made from abroad to the Turkish company's account for USD 50,000 or more are for loans utilized by the company. The amendment will also require the same declaration and documents for unidentified TRY transfers in the amount of TRY 250,000 or more.

Additional Exemption to the Obligation to Bring Loans Proceeds to Turkey

The amendment introduces a new exemption to the obligation to bring the proceeds of loans utilized from abroad to Turkey. Accordingly, Turkish residents can now utilize loans from abroad without bringing the proceeds thereof to Turkey to the extent that the loan refinances an existing loan utilized from abroad by the same borrower. However, the amount of the loan not utilized to refinance the loans obtained from abroad will still need to be brought into a Turkish bank account. Further, the Turkish resident borrower must submit a written declaration indicating that the loan is actually utilized to refinance existing loan(s) obtained from abroad.

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.

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