Turkey Takes Steps to Escape FATF ‘Grey List’ Through New Crypto Regulations

In a bid to remove itself from the Financial Action Task Force’s (FATF) “grey list” of countries that lack sufficient anti-money laundering measures, Turkey is preparing to introduce new legislation regarding cryptocurrencies. The country's finance minister, Mehmet Simsek, addressed the parliamentary commission, citing the need to address issues related to crypto assets to achieve full compliance with the FATF's standards.

The FATF, in a statement on its website, emphasized Turkey's vulnerability to money laundering and terrorist financing due to its geographic location and the risks associated with drug trafficking, migrant smuggling, human trafficking, and fuel smuggling.

Simsek outlined the remaining hurdle for Turkey's compliance as being the regulation of crypto assets. He expressed intentions to present a crypto assets bill to parliament, aiming for a swift submission and subsequent removal from the FATF grey list. However, he did not provide specifics about the proposed legal revisions.

Turkey's Approach to Crypto Regulations

The FATF was established by the G7, an organization comprising advanced economies, to safeguard the global financial system. In 2019, the FATF warned Turkey about significant deficiencies in its processes for freezing assets linked to terrorism and the proliferation of weapons of mass destruction.

Turkey's Presidential Annual Program for 2024, published in the Official Gazette of the Republic of Turkey, sets the objective of finalizing cryptocurrency regulations within the country by the end of 2024. The program outlines plans to establish precise definitions for crypto assets, potentially leading to future taxation. It also aims to define crypto asset providers, including cryptocurrency exchanges. However, the document doesn't provide detailed information about the upcoming regulatory framework.

Additionally, the Central Bank of the Republic of Turkey conducted a successful trial of its central bank digital currency, the digital lira, in December 2022, with further testing scheduled for 2024.

While the country had been working on the introduction of its own central bank digital currency (CBDC), plans now appear to be on hold.