Financial Intelligence Units (FIUs) play a crucial role in preventing money laundering and combating financial crimes globally. In Turkey, the Financial Crimes Investigation Board (MASAK) is responsible for performing these duties. MASAK is directly connected to the Turkish Minister and has the power to identify money laundering and risks for economic security, collect data related to suspicious transactions, and report to relevant authorities in case of serious suspicions of financial crimes. MASAK has recently updated its regulations to comply with the standards set by the Financial Action Task Force (FATF) and Mutual Evaluation Reports. In this article, we will discuss MASAK's new regulations for compliance programs and the expansion of its scope to include certain non-financial jobs and professions.
MASAK Compliance Program Changes
Turkey is a member of the Financial Action Task Force (FATF) since 1991, which requires member countries to comply with the standards set for combating the financing of ML/TF and the proliferation of weapons of mass destruction. FATF periodically evaluates member countries' compliance with these standards.
In December 2019, the Mutual Evaluation Report directed Turkey to undertake V. country assessments. In response, MASAK updated local regulations to reflect current conditions, such as adjusting identification limits and increasing penalty amounts. The rise of remote account openings with developing technology prompted new regulations. Based on the evaluation process, countries that fail to meet the compliance standards face different sanctions based on their level of compliance and whether deficiencies are corrected despite follow-up.
Compliance Program According to MASAK's New Regulations
The regulation and compliance program regulation can be explained in five headings:
Obliged Parties to Create a Compliance Program:
- The scope of obliged parties has been expanded to include Group A authorized institutions, finance, factoring and leasing companies, precious metals intermediary institutions, asset management companies, electronic money institutions, and payment institutions.
- Exceptions are provided for those who provide intermediary services exclusively for invoice payments, payment exclusively for order initiation, and provision of information exclusively related to the payment account.
Financial Group Definition:
- Determination of the main financial institutions and other institutions that make up the financial group and their notification to MASAK.
- Notification of changes in the financial group to MASAK within 30 days.
- Establishing a Compliance Program at the financial group level.
- Assignment of Compliance Officer and assistant at the financial group level.
- The oversight responsibility for implementing the compliance program at the financial group level has been determined as the board of directors of the parent financial institution.
- The compliance program must include creating a group-level compliance program, establishing corporate compliance policies in parallel with the group compliance program, establishing group-level training policy, group-level coordination, group-level risk management activities and monitoring follow-up activities, determining the goals and boundaries of group-level information sharing, policy-making, compliance, and taking into account the scope of the National Risk Assessment in the preparation of the program.
Compliance Officer and Assistant Compliance Officer:
- Appointing an assistant compliance officer with the qualifications sought for the compliance officer, positioning them in the organization to be subordinate to the compliance officer, assigning them in the same time and procedure as the compliance officer, transferring authority to the deputy compliance officer.
- If the compliance officer and the deputy compliance officer leave their job, they must be notified to MASAK within 10 days, and a new appointment is required within 30 days.
- It is regulated by whom the internal audit activities can be carried out: internal audit units or the inspection board.
- The scope of internal auditing has been expanded in terms of whether the audit activities are carried out by the person or unit authorized by the board of directors (the said authorized personnel are independent).
New Obligated Persons in Certain Non-financial Jobs and Professions
- Free lawyers in terms of specific transactions
- Intermediaries in precious metal, stone, or jewelry trading transactions
- Intermediaries in the purchase and sale transactions of all kinds of sea, air, and land transportation vehicles, including construction equipment
Certain Non-Financial Jobs and Professions
- Those who trade precious metals, stones, or jewelry and intermediaries in these transactions
- Those who deal with real estate purchase and sale for commercial purposes and intermediaries in these transactions
- Self-employed lawyers within the scope of their work enumerated in the "Measures Regulation."
- Independent accountant, the independent accountant financial advisor, working independently of an employer.
- Independent audit firms authorized to audit financial markets.
Identification of Transaction Limits:
Previously, customer identification was required for transactions of 20,000 Turkish Lira and above, or if the amount of the transaction or the total amount of more than one linked transaction exceeded the specified threshold. However, the new regulation has increased the threshold for customer identification to transactions of TL 75,000 and above.
Identification of Electronic Transfer Limits:
In the case of electronic transfers, customer identification was previously required for transactions of TL 2,000 and above or if the transaction amount or the total amount of more than one related transaction exceeded the specified threshold. Under the new regulation, the threshold for customer identification has been increased to transactions of TL 7,500 and above.
Identification of Ultimate Beneficial Ownership Abroad:
According to the relevant articles of the Measures Regulation, partners with more than 25% share of the legal person customer should be identified to recognize the real beneficiary. The new regulation has introduced an additional provision, allowing the confirmation of information obtained from foreign legal person partners through official sources open to the public in the relevant country, thereby ensuring more accurate identification of ultimate beneficial ownership.
MASAK Audits and Sanctions That May Be Applied
The liability audit carried out by MASAK can be carried out on-site or remotely. MASAK inspections and sanctions will be as follows:
- MASAK will make a written warning and give 30 days of the violation. If the violation is not remedied, an administrative fine of not less than 500,000 TL and an additional 60-day period to remedy the violation
- If the violation is still not resolved, an administrative fine of twice the initial administrative fine and an additional 30 days will be given
- If the violation is still not remedied, a notification will be sent to the main regulatory body to which the liability is subject to cease, restrict, or completely cancel the obliged party's license.
- An administrative fine at the rate of one-fourth of the administrative fine applied to the '' board member/members and/or manager (s) '' of the violating obligee will be imposed.
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