AML and Counter Terrorist Financing: Turkey Introduces Procedures and Principles to Fight Against Proliferation of Financing Weapons of Mass Destruction
Turkey’s Ministry of Treasury and Finance (“Ministry”) has recently issued the Regulation on the Procedures and Principles Regarding the Implementation of the Law Preventing the Financing of the Proliferation of Weapons of Mass Destruction (“Regulation”), bringing out new principles and procedures of the Law №7262 published in order to fight against money laundering and financing of terrorist actions. The Regulation establishes certain rules of issues relating to financing weapons of mass destruction (“WMD”) such as freezing assets, forbidden acts and activities, duties and powers of the designated authorities and exceptional circumstances.
Background
Turkey is a member of Financial Action Task Force (“FATF”) since 1991. As having understood the risks conducive from money laundering and terrorist financing and including the need to improve measures for freezing assets linked to terrorism and proliferation of weapons of mass destruction, the Law numbered 7262 on Preventing the Proliferation of Financing Weapons of Mass Destruction was approved on December 27, 2020 (“Law №7262”).
The Law №7262 was aimed to combat financing of the proliferation of WMD in liaison with the recommendations of FATF.
Further Guidance on the Duties and Powers of the Designated Authorities under the Regulation
These new pieces of legislation, the Law №7262, and the Regulation, entitles the President of Republic of Turkey (“President”) to freeze assets and marine transportation vehicles of persons, entities or organizations stated in the resolutions of United Nations Security Council (“UNSC”) or persons or entities controlled directly or indirectly by them or acting on their behalf or for their account. The Regulation authorizes the Financial Crimes Investigation Board (“MASAK”) to carry out certain actions. As per the Regulation, duties, and powers of MASAK include as follows:
-conducting necessary financial research related to freezing of assets and submitting research results to the Commission on Audit and Cooperation (as defined below),
-submitting information to the President on persons, institutions or organizations listed and de-listed under UNSC resolutions,
-requesting information from public institutions and organizations and natural and legal persons within the scope of financial research,
-correcting the misapplications that may occur during the implementation of the decisions of the President,
-sending injunctions to natural and legal persons and public institutions and organizations who hold asset records to implement the freezing action,
-listing persons, institutions, or organizations about whom decision on freezing of assets has been made on MASAK website and de-listing them if the decisions are repealed,
-notifying the repealing decisions to relevant person, institution or organization implementing the freezing decision.
In addition to the above listed duties of MASAK, it is important to touch that MASAK is responsible from the execution of decisions on freezing assets of persons, entities, and institutions by virtue of the Regulation. To this end, MASAK must immediately notify related institutions such as Ministry of Transport, Interior, Trade and General Directorate of Land Registry and Cadaster to determine the asset records if any and fulfil the execution of decisions on freezing assets. In case that the institution notified by MASAK, determines that there are registered asset records on behalf of that persons; MASAK shall be notified about the frozen assets within seven days from the date of notification. Last but not least, MASAK is also responsible from asset management of the assets that are subject to freezing actions. Accordingly, MASAK may issue permission for frozen assets within certain conditions or limits, hence, may cancel the permission when deemed necessary or change the scope of the permission.
The Law №7262 introduces a new authority, the Commission on Audit and Cooperation (“Commission”), aimed to ensure the audit and cooperation in fight against money laundering and financing of WMD. Accordingly, the Regulation elaborates the working principles and procedures of the Commission and sheds light on the composition of the authority. As per the Regulation, the Commission consists of one member from different institutions including The Ministry of Justice, the Ministry of Interior, the Ministry of Foreign Affairs and Ministry of National Defense.
The Commission is particularly responsible from approving applications against UNSC listing decisions, submitting proposals to the President, notifying public institutions and organizations about the measures to be taken, and filing a criminal complaint.
Decisions on Freezing Assets and Forbidden Actions
As per the Regulation, the President decides upon freezing assets and submits its decision to MASAK. Thereupon, the decision of freezing assets is published on the Official Gazette and also sent as an information to the current address registered in official records in Turkey of the related person, entity, or organization. Once the decision of freezing assets is published on the Official Gazette, all kinds of transactions regarding the elimination, consumption, conversion, transfer, and assignment or disposition of assets against the decision are deemed invalid.
In addition to freezing actions, such persons may also be subject to criminal prosecution. In this regard, Law №7262 stipulates that unless permitted by the UNSC, depending on the scope of the relevant decisions; import, export and transit of substances, materials, and equipment and, transfer of technology or contribution or support to nuclear activities or the development of nuclear weapon launch systems are forbidden. According to Regulation, criminal complaints may be filed by concerned, in case that such persons violate related provisions of Law №7262 and Turkish Criminal Code numbered 5237 by conducting said forbidden acts. In fact, in some criminal situations UNSC may be notified through the Ministry of Foreign Affairs.
Moreover, the Regulation also establishes certain exceptional cases where decisions on freezing assets and other sanctions are inapplicable. In this regard, the Regulation descopes the basic expenses, required expenses due to unusual spending, expenses incurred by judicial, administrative, or arbitral awards and expenses and payments for the annulment or suspension of sequestration orders, other expenses deemed appropriate by UNSC, from the assets that may be subject to freezing actions.
It is also important to note that the payments arising from a contract made before the decision of the UNSC regarding listing to be made to persons or organizations that are not included in the UNSC lists, and do not act on behalf and account of those on the list or are not under the control of the UNSC directly or indirectly, provided that they are not involved into such forbidden acts, are also cannot be subject to freezing actions by virtue of the Regulation.
The Regulation also establishes another exceptional circumstance which is the situation of dependents of person whose assets are subject to freezing actions. Accordingly, MASAK is authorized to permit certain activities in order to ensure the minimum livelihood of the person whose assets are frozen and their dependents. In fact, MASAK is also authorized to ensure that commercial enterprises and other legal entities of entities and organizations whose assets are frozen, are able to continue their activities.
Şafak Herdem, Ezgi Ceren Aydoğmuş
