As a member of the Financial Action Task Force ("FATF"), Turkey has tightened its Anti-Money Laundering and Counter-Terrorism Financing regulations, which would affect crypto asset service providers and other financial service providers.
Financial Crimes Investigation Board ("MASAK") has published the General Communiqué No. 21 ("Communiqué") in the Official Gazette dated 17 November 2022 and entered into force on the same date.
According to the Communiqué, the concept of "politically exposed person" ("PEP") was introduced into the laws of Turkey in line with FATF rules, and enhanced customer due diligence measures shall be applied where PEPs are involved.
1. Definition of PEP:
The term "Politically Exposed Person" is defined as persons with political influence and/or power who are appointed or elected to office in Turkey or any jurisdiction in the world, and their spouses, first-degree relatives and close associates.
It should also be noted that the expression of "close associate" of the PEPs means any social, cultural or economic closeness that can be considered as a combination of interests or purposes, such as being; (i) relative other than the first-degree, (ii) engaged to be married, (iii) shareholders/partners of the same company, or (iv) in an employment relationship.
2. Obliged Parties:
Financial institutions, crypto asset service providers and natural and legal persons operating in specific non-financial business lines are obliged to comply with the Communiqué.
Examples of natural and legal persons operating in certain non-financial business lines are: (i) those who buy and sell precious metals, stones or jewellery, (ii) those who buy and sell real estate for commercial purposes, (iii) notary publics, and (iv) independent accountants and certified public accountants.
3. Enhanced Measures:
In accordance with the Communiqué, obliged parties shall carry-out the following 3 (three) enhanced measures to PEPs:
- To obtain the approval of the senior management for establishing a business relationship, maintaining the existing business relationship or performing the transaction;
- To take reasonable measures to determine the source of the assets and funds belonging to these persons or subject to the transaction;
- To increase the number and frequency of checks and take additional measures if necessary.
The rule set of the Communiqué are in line with the guidelines and rules of FATF and therefore aligns the Turkish regulations with generally accepted standards.
Application of such measures shall be standard for foreign PEPs, while they are used only at "high-risk" transactions with respect to the Turkish PEPs.
When PEPs' term of office has ended, they will continue to be subject to enhanced measures for at least 1 (one) more year.
In case of violation of the rules in the Communiqué, as a result of a case-by-case investigation and taking into account the amount and scale of the damage, the obliged parties may be subject to sanctions, such as administrative fines, temporary suspension of the activity, restriction of activities or cancellation of the operating license.
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.