Turkish banks face black-list risk

Turkish banks face black-list risk

Turkey is at risk of being placed on a banking black list once again as the country postponed enacting a regulation against money laundering and financing terrorism.

The Financial Action Task Force, an inter-governmental body that fights money laundering and terrorist financing in the international financial system, warned Ankara in June to fulfill its commitments in enacting adequate legislation on the issue, according to daily Financial Times (FT).

“If adequate counter-terrorist financing legislation has not been enacted by October 2012, the FATF will initiate discussions on Turkey’s membership,” the FATF said.

Turkey is on FATF’s grey list, could be black listed

Turkey is on the FATF’s grey list and may be moved to the black list, which includes Iran and North Korea. The body was scheduled to discuss the issue yesterday in a plenary meeting in Paris and may announce a decision on Turkey tomorrow.

In May, Justice Minister Sadullah Ergin had warned that Turkey would land on the FATF black list if it failed to adopt legislation on the prevention of financing terrorism. The proposed legislation would empower an examination commission to freeze assets of suspected financiers of terrorism without the court rule normally required in such cases. This could be controversial as the Turkish government is often criticized as concentrating too much central power.

The United States officially requested that Turkey swiftly pass the draft bill in July 2011. Turkey was given a June 20 deadline last year to complete the necessary legal regulations and meet demands made by the FATF.

“We need to work on it, but the commitment is there. We have put together legislation that satisfies international standards, FATF requirements; that legislation is currently in parliament, but we have not yet been successful in pushing it through parliament,” Finance Minister Mehmet Şimşek said.