Türkiye close to exiting global watchdog’s illicit finance list

Türkiye is poised to be removed from a financial watchdog’s “gray list” as early as next month, a potential boost to one of the Middle East’s biggest economies following its efforts to curb illicit money flows.

An on-site visit by the Paris-based Financial Action Task Force earlier this month noted significant progress, according to people familiar with the matter, who requested anonymity as the deliberations are private. That means Türkiye could come off the list of jurisdictions under increased monitoring on the final day of the FATF plenary in Singapore on June 28, the people said. No final decisions have been made, Bloomberg reports.

The expected change would boost Türkiye’s efforts to attract capital into its $1.1 trillion economy, equaled in size regionally only by Saudi Arabia, after years of unorthodox monetary policy that spurred investors to shun lira assets. About a year into Türkiye’s embrace of more conventional economics, and some of the world’s most aggressive interest-rate increases, investors are starting to return. 

“While the FATF move alone will not unleash an influx of money inflows, it will aid Simsek’s efforts to reinstate orthodox economic policies and pitch Türkiye as a solid investment destination,” said Emre Peker, Director of Europe at Eurasia Group in London, referring to Turkish Treasury & Finance Minister Mehmet Simsek.

A significant majority of the FATF’s members must vote that Türkiye has made sufficient progress before it can get off the list. Just a few votes to the contrary — some members have more sway than others - could result in it staying on the list, the people said. Members include individual countries and regional organizations such as the European Commission.

After the FATF’s most recent plenary in February, the group said Türkiye “substantially completed its action plan.” That included key reforms on its implementation of sanctions for terrorism financing and boosting resources for the national financial intelligence agency, known by its Turkish acronym Masak, the FATF said at the time.

The government has also worked with the US to freeze terrorists’ assets and this month proposed a bill regulating cryptocurrency platforms to help address FATF’s final outstanding recommendation on “new technologies.”