Turkey

As per the Regulation on Measures Regarding Prevention of the Laundering of the Proceeds of Crime and Financing of Terrorism (number 2007/13012) (“Money Laundering Regulation”), the Directorate of the Financial Crimes Investigation Board (“DFCIB”) is the central authority for reporting by obliged parties including lawyers. In Turkish, the DFCIB is known as “MASAK”.

Pursuant to the definition in Article 282 of the Turkish Criminal Code, the offence of Money Laundering consists of the transfer of proceeds obtained as a result of a criminal offence carrying a minimum penalty of six months or more imprisonment, or the conversion of such proceeds in various ways in order to conceal the illicit source of such proceeds or to give the impression that they have been legitimately acquired.

The criminal conduct captured by the Money Laundering offences are the purchase, acquisition, possession or use of proceeds whose nature is known to be from a criminal source within the scope of the Money Laundering definition.

The DFCIB is the principal regulator on anti-money laundering matters. There is no separate agency or regulatory authority specifically allocated to lawyers.

Whilst Turkey is not a member of the EU, as a candidate country, it has adapted its money laundering legislation in line with developments in EU Directives. Turkish laws have not been officially harmonised with the Fourth EU Money Laundering Directive. However provisions from the Fourth Directive have been adopted such as:

• updating provisions on reporting of suspicions transactions (as per Communique 15 published on 10th of August 2016;
• amendments on provisions regarding suspension of reported transactions through the Regulation on Postponement of Transactions Within the Scope of Prevention of Laundering Proceeds of Crime and Financing of Terrorism published on 29th of July, 2016;
• introduction of compliance officer provisions through amendments to the Regulation on Compliance Programmes on Anti-Money Laundering And Combating Financing Of Terrorism published on 18th of March 2016;
• revisions to customer due diligence provisions through amendment to the Money Laundering Regulation published on 18th of March 2016.

The main laws regarding Anti-Money Laundering in Turkey are:

• Law No. 5549 on the Prevention of the Laundering of the Proceeds of Crime
• Money Laundering Regulation
• Turkish Criminal Law No. 5237
• Turkish Criminal Procedure Law No. 5271
• Misdemeanours Law No. 5326
• Banking Law No. 5411

Various secondary legislation has been issued specifically regarding Anti-Money Laundering, with the main secondary legislation being:

• Regulation on Measures Regarding Prevention of Laundering Proceeds of Crime and Financing of Terrorism (see above)
• Regulation on Postponement of Transactions Within the Scope of Prevention of Laundering Proceeds of Crime and Financing of Terrorism
• Regulation on Compliance Programmes on Anti-Money Laundering And Combating Financing Of Terrorism (“Compliance Regulation”)

Various communiques regarding Anti-Money Laundering have been issued such as:

• Financial Crimes Investigation Board General Communique No. 5
• Financial Crimes Investigation Board General Communique No. 7
• Financial Crimes Investigation Board General Communique No. 8
• Financial Crimes Investigation Board General Communique No. 13
• Financial Crimes Investigation Board General Communique No 15 amending on General Communique 13
• Financial Crimes Investigation Board General Communique No. 16 amending on General Communique 5

Articles 231 and 232 of The Presidential Decree on Organisation of the Presidency number 1 are related to Anti-Money laundering and give certain powers to the DFCIB to issue further regulations.

Lawyers’ obligations are specifically regulated under the Money Laundering Regulation which applies only to independent legal professionals, in other words lawyers in private practice (not in-house lawyers). The activities of lawyers covered by the Regulation are specified in Article 4 and are limited to:

(i) buying and selling of real property,

(ii) establishment and management of companies, charitable foundations and associations, and sales of the foregoing entities,

provided that the obligations of lawyers under the Regulations in respect of such activities do not infringe the statutory right of defence of a lawyer’s clients.

Link to English translation of the Money Laundering Regulation: http://www.masak.gov.tr/en/content/l-p-c-national-legislation/159

No. The specific provisions in the Money Laundering Regulations concerning Turkish lawyers do not apply to visiting lawyers.

In addition, foreign lawyers who operate in Turkey can only provide consultancy advice on foreign or international law pursuant to Article 44 of the Attorneyship Law. Since they are not able to offer the type of services to which the Money Laundering Regulations apply (as referred to in Question 7 above) they are not subject to local laws regarding Anti-Money Laundering.

Therefore a visiting lawyer or licensed foreign lawyer would only be subject (as per any other citizen or visitor) to the general Anti-Money Laundering offences to the extent he was a party to or accessory to an offence committed in Turkey.

Reporting obligations apply to the following:

• Banks
• Other financial institutions authorised to issue bank cards or credit cards
• Foreign exchange bureaus
• Financing and factoring companies
• Capital Markets Brokerage Houses and portfolio management companies
• Payment service providers and electronic money institutions
• Investment partnerships
• Insurance, reinsurance and pension companies, and insurance and reinsurance brokers
• Financial leasing companies
• Providers of settlement and custody services under the capital markets legislation
• Borsa Istanbul A.S. pertaining only to its custody services relating to Precious Metals and Precious Stones Market
• PTT Corporate (Postal and Telegraph Organisation) and cargo companies
• Asset management companies
• Dealers of precious metals, stones and jewelleries
• Directorate General of Turkish Mint pertaining only to its activities of minting gold coins
• Precious metals intermediaries
• Buyers and sellers of real estate for trading purposes and brokers/intermediaries
• Dealers in sea, air and land transportation vehicles including construction machines
• Dealers and auctioneers of historical artefacts, antiques and works of art
• Lottery and betting operators including the Turkish National Lottery Administration, Turkish Jockey Club and Football Pools Organization Directorate
• Sports Clubs
• Public notaries
• Private practice lawyers (limited to their activities referred to in Question 7. above)
• Certified general accountants, certified public accountants and sworn-in certified public accountants in private practice
• Independent auditors licensed to audit under the Capital Markets Law

No money laundering guidance has been issued specifically for lawyers by the Bar Association or any other self regulatory organisation.

However DFCIB publishes money laundering guidance mainly aimed at financial institutions. However guidance in the form of a General Communique dated 3 August 2016 issued by the DFCIB applies in generally to parties subject to reporting obligations (which would include private practice lawyers).

No, the Turkish Bar Association is not involved in supervising or enforcing compliance with Anti-Money Laundering Regulations.

Commercial Banks Brokerage Houses, Insurance and Pension Companies and the Turkish Postal and Telegraph Organization (in respect of its banking activities only) are obliged to appoint a Compliance Officer pursuant to Article 4 of the Regulation on Program of Compliance with Obligations of Anti-Money Laundering and Combating the Finance of Terrorism. These entities have to establish a compliance programme for employees.

However there is no legal requirement for MLROs or nominated officer to be appointed to oversee reporting obligations for law firms. Since the Regulations apply to all private practice lawyers each lawyer is obliged to comply with the reporting obligations independently.

Customer Identification procedures apply pursuant to Article 5 of the Money Laundering Regulation for all obliged parties including those lawyers conducting the activities stated in Question 7. Persons under a reporting obligation (as listed in Question 9 above) must identify their customers or those who act on their behalf in the following circumstances:

a) Regardless of the monetary amount when establishing a permanent business relationship with a customer;

b) When the amount of a single transaction or the total amount of multiple linked transactions is equal to or more than twenty thousand Turkish Lira (TRY);

c) When the amount of a single transaction or the total amount of multiple linked transactions is equal to or more than two thousand TRY in wire transfers;

d) Regardless of the monetary amount in cases requiring suspicious transaction reporting;

e) Regardless of the monetary amount, in any case where there is a suspicion about the adequacy and the accuracy of previously acquired identification information.

Customer identification must be carried out before a permanent business relationship is established or the relevant transaction is conducted.

When establishing a permanent business relationship, information on the purpose and intended nature of the business relationship must also be obtained.

There is a general provision in Articles 18 and 19 of the Money Laundering Regulation where obliged parties must verify the accuracy of information provided regarding information received for customer identification within the framework of the risk based approach. However there are no specific further guidelines for lawyers and rather the specific CDD guidelines are directed at financial institutions.

Cases where simplified CDD measures may apply have been classified in Article 26 of the Money Laundering Regulation and details of its implementation are set out in General Communique No. 5. Simplified CDD may be adopted for the following types of clients (as relevant to Lawyers):

• Transactions in which the client is a bank
• Transactions in which the client is a public body or a quasi-public professional organisation
• Transactions where the client is an international organisation, embassy or consulate located in Turkey
• Stock exchange listed companies

Nevertheless this does not discharge the Lawyer from a risk based assessment such that where the Lawyer has suspicions of a potentially reportable transaction then an enhanced level of due diligence should be applied.

Regarding Lawyers, complex and unusually large transactions and transactions which have no apparent reasonable legitimate and economic purpose require an enhanced level of CDD pursuant to Article 18 of the Money Laundering Regulations.

If yes please provide details of these requirements and examples of the types of evidence required to demonstrate an enhanced level of CDD.

There are no guidelines on how to determine compliance with these requirements. There are guidelines which apply specifically to banks in terms of identifying risky transactions.

Yes, CDD Requirements for different entity types are specified by legislation as follows: natural persons, legal entities registered with the trade registry, associations and foundations, trade unions and confederations, political parties, non-resident legal persons, unincorporated organizations and public/governmental institutions.

Yes, whilst trust structures are not in use in Turkish law, bearer shares are permitted and are in common use.

No, only financial institutions are permitted to rely on third party’s CDD in certain circumstances.

No

A Lawyer is obliged under Article 27 of the Money Laundering Regulation to file a report with DFCIB where he suspects or has information that proceeds or assets have been acquired through illegal means or used for illegal purposes or the assets or proceeds are suspected to be used for terrorist activities or by terrorist organizations, or to finance terrorism or otherwise linked to such activities.

In accordance with Article 36 of the Attorneyship Law, lawyers are obliged to keep client information confidential. Whilst there is not an express exception in the context of the specific reporting obligation, we are of the view that, given the Attorneyship Law is of a higher priority in law compared to the Money Laundering Regulation and Article 4 of the Money Laundering Regulation (as referred to in Question 7 above) reserves the statutory rights of defence of clients, the statutory obligation of client confidentiality permits a lawyer not to disclose client confidential information in reporting a suspicious transaction.

Article 28(4) of the Money Laundering Regulations exempts any person reporting a suspicious transaction from any criminal or civil liability.

Yes

If yes, must consent from authorities be obtained first?

No. In fact it works in the opposite way. Obliged parties submitting suspicious transaction reports may request permission from the DFCIB to suspend processing a transaction. The suspension cannot exceed seven work days following the date the transaction was reported.

Parties subject to reporting obligations having a continuing obligation to monitor transactions conducted by their clients whether they are in compliance with information provided under a permanent business relationship and must keep up-to-date information, documents and records regarding the client.

As per the CDD requirements referred above, lawyers are not under an obligation to satisfy themselves as to a client’s source of wealth.

As per the CDD requirements referred above, lawyers are not under an obligation to satisfy themselves as to a client’s source of funds.

Turkish identity card, driving license or passport for Turkish citizens or passport, residency permit for Turkey or any type of official identity card for non-Turkish citizens.

Company name, trade registry number, field of activity and full address can be verified through publicly available information at the local trade registry; tax identity number may be checked with the local tax authority.

Lawyers are regulated under the Anti-Money Laundering legislation for the specific purpose referred to in Question 9 above.

We are aware from public sources but there is no reported data in relation to lawyers specifically provided by the Bar Association or DFCIB.

Yes, in October 2014.

If yes, what were the findings concerning Lawyers' compliance with the FATF 40+9 recommendations?

It has been noted that in general Turkey has made significant progress in addressing deficiencies in its anti-money laundering/countering the financing of terrorism (AML/CFT) measures since the mutual evaluation report of February 2007. In respect of Lawyers’ compliance with the FATF 40+9 recommendations, the following findings were made:

• Recommendations 12 and 16 stated that Lawyers were not obliged parties and not required to submit suspicious transaction reports. However, it notes that this deficiency has been addressed since lawyers are now subject without distinction to all the provisions of the Money Laundering Regulations and are obliged to submit suspicious transaction reports.
• Recommendation 16 stated that lawyers were not subject to the Compliance Regulation providing for internal compliance controls. This remains the position.
• Recommendation 24 notes that whilst the DFCIB (MASAK in Turkish) is the overall supervisory authority, most obliged parties are specifically supervised through examiners of their regulatory body (e.g. the Banking Regulatory and Supervision Authority for banks). It notes that (in line with our response on Question 4 above) it is not clear from the list of examiners, which examiner is responsible for lawyers since no specific regulator that is appointed to supervise lawyers specifically.

No.

DFCIB publishes an annual activity report. The annual report for 2018 has not been published yet. However, according to the 2017 report, there were a total of 27,209 suspicious transactions reported to the DFCIB. However the report does not refer specifically to the number of reports submitted by lawyers.

We note from the FATF report of October 2014 that it records only one suspicious transaction report filed by Lawyers in 2014. Therefore (extrapolating from this) we believe since then the number of suspicious transactions reported by Lawyers will be relatively low and the vast bulk of reporting derives from financial institutions.

These are covered in the above responses.