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Financial crime watchdog removes Turkey from money laundering ‘gray list’

NewsFinancial crime watchdog removes Turkey from money laundering 'gray list'

As the sunsets, a ferry boat glides across the waters of the Golden Horn with the Suleymaniye Mosque and the city of Istanbul, Turkey in the background. 

Vw Pics | Universal Images Group | Getty Images

The Financial Action Task Force, an international watchdog organization dedicated to combating money laundering and illicit cash flows, on Friday removed Turkey from its “gray list” of countries that need special monitoring, handing a major vote of confidence to the country in the midst of its economic turnaround efforts.

“The FATF welcomes Türkiye’s significant progress in improving its AML/CFT regime,” the Paris-based organization wrote in its latest report, using the Turkish government’s spelling of its country’s name and the acronym for anti-money laundering and combating the financing of terrorism.

It said that Turkey had strengthened the effectiveness of its AML/CFT regime to address “deficiencies” that FATF listed in its October 2021 monitoring report.

Those deficiencies included FATF concerns over unregistered money transfer services, insufficient resources dedicated to terrorist financing investigations, alleged involvement in sanctions evasion, lack of oversight on high-risk sectors used for money laundering such as banking and real estate, and insufficient oversight of nonprofit organizations that could be used for terrorist financing, among others.

The FATF in its 2021 report had found sectors like banking, construction and property in Turkey vulnerable to illicit financing of United Nations-sanctioned groups like the Islamic State and al-Qaeda.

The watchdog organization concluded in its 2024 findings that Turkey is “no longer subject to the FATF’s increased monitoring process,” but that it “should continue to work with the FATF to sustain its improvements in its AML/CFT system, including by continuing to ensure its oversight of the NPO [nonprofit organization] sector is risk-based and in line with the FATF standards.”

The FATF’s announcement comes as a welcome boost to Turkey’s economic turnaround efforts after years of high inflation, a depreciating local currency and inconsistent foreign investment levels.

Mohamed Daoud, industry practice lead at Moody’s ratings agency, described the positive impact the new designation is likely to have.

“Turkey’s removal from the Financial Action Task Force (FATF) Grey List recognizes the significant progress made by the Turkish government and various economic sectors in strengthening their fight against money laundering and terrorist financing,” Daoud said.

“This development is expected to boost Turkey’s reputation internationally, potentially boosting foreign investment and relationships with European and U.S. institutions.”


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