MASAK Information Note

In our country, the fight against Money Laundering and the Financing of Terrorism is primarily carried out by the Financial Crimes Investigation Board (MASAK), which operates as a main service unit under the Ministry of Finance and reports directly to the Minister of Finance.

In this context, MASAK’s fundamental function is to conduct research and sectoral studies on developments in the area of money laundering, as well as to develop preventive measures, collect data, analyze and evaluate the collected data, carry out or commission research and investigations, and convey the obtained information and findings to the relevant authorities.

To fulfill these functions, MASAK contributes to the development of policies, formulates implementation strategies, prepares drafts of laws, regulations, and other legislative frameworks within the scope of determined policies, enacts necessary regulations related to implementation, ensures coordination among relevant institutions and organizations, and engages in consultation and information exchange.

The fight against the laundering of proceeds of crime in our country gained legal recognition with Law No. 4208 enacted in 1996, and until the enforcement of Law No. 5549, Law No. 4208 served as the legal basis for this fight.

However, over time, the need for a new legal framework in our country became evident due to the development of anti-money laundering methods on an international scale and the increase in international economic and financial relations to an unprecedented extent compared to previous periods.

Law No. 5549 on the Prevention of Laundering Proceeds of Crime, which was prepared to meet this need, came into effect on October 18, 2006. With this law, collecting data, receiving, analyzing, and evaluating suspicious transaction reports within the scope of preventing the financing of terrorism also became part of MASAK’s duties.

Obliged Parties

To effectively combat money laundering and prevent the financial system from being exploited by criminals, certain obligations have been imposed on financial institutions and specific professional groups both internationally and domestically.

In this regard, Article 2(d) of Law No. 5549 on the Prevention of Laundering Proceeds of Crime identifies as obliged parties those operating in banking, insurance, private pensions, capital markets, lending, and other financial services, as well as in the areas of postal and transportation services, games of chance and betting, currency exchange, real estate, precious stones and metals, jewelry, vehicles, construction equipment, historical artifacts, art, antiques, and those facilitating these activities, in addition to notaries and sports clubs. The law also grants the President the authority to designate other professions and businesses as obliged parties.

According to Article 4 of the Regulation on Measures Regarding the Prevention of Laundering Proceeds of Crime and Financing of Terrorism:

(1) The obliged parties are those listed below, along with their branches, agents, representatives, and commercial proxies, as well as similar affiliated units:

• Banks.
• Institutions authorized to issue bank cards or credit cards other than banks.
• Authorized institutions as defined in the foreign exchange legislation.
• Finance and factoring companies.
• Capital market intermediary institutions and portfolio management companies.
• Payment institutions and electronic money institutions.
• Investment trusts.
• Insurance, reinsurance, and pension companies, as well as insurance and reinsurance brokers.
• Financial leasing companies.
• Institutions providing clearing and custody services under the capital markets legislation.
• Borsa İstanbul A.Ş., limited to custody services for Precious Metals and Precious Stones Market.
• Post and Telegraph Organization (PTT) and cargo companies.
• Asset management companies.
• Payment institutions and electronic money institutions.
• Those engaged in the trade of precious metals, stones, or jewelry.
• General Directorate of Mint and Stamp Printing House, limited to the minting of Turkish Republic gold coins.
• Precious metals exchange intermediary institutions.
• Those engaged in or facilitating the trade of real estate for commercial purposes.
• Those involved in the trade of land, sea, air vehicles, and construction equipment.
• Those involved in the trade or auctioneering of historical artifacts, antiques, and works of art.
• The General Directorate of National Lottery, the Turkish Jockey Club, and the Sports Toto Organization, including those operating in the field of games of chance and betting.
• Sports clubs.
• Notaries.
• Independent accountants, financial advisors, and certified public accountants not affiliated with any employer.
• Independent auditing institutions authorized to conduct inspections in financial markets.

(2) Obliged parties based abroad are considered obliged parties under the first paragraph for their branches, agents, representatives, and similar affiliated units in Turkey.
(3) Obliged parties based in Turkey are required to apply the provisions of the Regulation to their branches, agents, representatives, and similar affiliated units abroad to the extent permitted by the legislation and authorities of the countries in which they operate.

Obligations

To effectively combat the laundering of proceeds of crime and prevent the financial system from being exploited by criminals, certain obligations have been imposed on financial institutions and specific professional groups both internationally and domestically.

The obligations introduced as preventive measures in the fight against money laundering and the financing of terrorism are explained below:

1 – Customer Identification

Pursuant to Article 3 of Law No. 5549, obliged parties are required to identify the individuals conducting or on whose behalf transactions are carried out prior to executing such transactions. According to the second paragraph of this article, the Ministry of Finance is authorized to determine the types of documents required for identity verification, the types of transactions requiring identity verification, their monetary thresholds, and other related procedures and principles through regulations. Based on the authority granted by the law, the principles for customer identification are regulated under the third section of the Regulation on Measures Regarding the Prevention of Laundering Proceeds of Crime and Financing of Terrorism. Accordingly:

Obligations:

a) Regardless of the amount, when establishing a continuous business relationship,
b) When the transaction amount or the total amount of several interconnected transactions is 20,000 TL or more,
c) In electronic transfers, when the transaction amount or the total amount of several interconnected transactions is 2,000 TL or more,
ç) In cases that require suspicious transaction reporting, regardless of the amount,
d) When there is doubt about the adequacy and accuracy of previously obtained customer identification information, regardless of the amount, the customer must identify their clients and those acting on behalf of or on account of their clients by obtaining and verifying the accuracy of the identity information.

Identification must be completed before establishing the business relationship or before the transaction is carried out.

In establishing a continuous business relationship, information must be obtained about the purpose and nature of the relationship.

The regulations in the third section of the Regulation titled “Principles of Identifying the Customer” include provisions on the identification of natural persons, legal entities registered in the trade register, associations and foundations, unions and confederations, political parties, foreign legal entities, unincorporated entities, and public institutions. It also addresses the identification of persons acting on behalf of others, the verification of the authenticity of documents, subsequent identity verification, the identification of the ultimate beneficiary, special attention to legal entities, special attention requirements for transactions, monitoring of customer status and transactions, technological risk precautions, third-party trust, transaction rejection, termination of business relationships, correspondent relationships, electronic transfers, relationships with high-risk countries, and simplified measures.

2 – Suspicious Transaction Reporting

According to Article 4, paragraph 1 of Law No. 5549, when there is any information, suspicion, or fact leading to suspicion that the assets involved in a transaction carried out or attempted to be carried out by an obliged party or through them have been obtained through illegal means or are being used for illegal purposes, these transactions must be reported to MASAK.

According to Article 27, paragraph 1 of the Regulation on Measures for the Prevention of Money Laundering and Terrorism Financing, a suspicious transaction occurs when there is information, suspicion, or facts leading to suspicion that the assets involved in a transaction carried out or attempted to be carried out by an obliged party or through them have been obtained through illegal means or are being used for illegal purposes, including for terrorist activities or by terrorist organizations, terrorists, or those financing terrorism, or that they are related to or connected with such individuals or entities.

Suspicious transaction reporting is carried out by the obliged party themselves in the case of a natural person, by the legal representatives of a legal entity, by the managers of unincorporated entities, or by those authorized by them, and in cases where a compliance officer is appointed, by the compliance officer.

According to Article 4, paragraph 2 of Law No. 5549, obliged parties are prohibited from disclosing to anyone, including those involved in the transaction, except for the auditors assigned for compliance control and the courts during the trial, that a suspicious transaction has been reported to MASAK.

3 – Appointment of a Compliance Officer

According to Article 5 of Law No. 5549, it is obligatory to appoint a compliance officer with the necessary authority to ensure compliance with the obligations imposed by this law.

The procedures and principles regarding the appointment of a compliance officer have been defined in the Regulation on Compliance Programs for Preventing Money Laundering and Terrorism Financing, and according to this regulation:

• Banks,
• Capital market intermediary institutions,
• Insurance and pension companies,
• Post and Telegraph Organization (limited to banking activities),
• Institutions authorized to issue bank cards or credit cards other than banks,
• Authorized institutions specified in the foreign exchange legislation,
• Financial and factoring companies subject to lending legislation,
• Reinsurance companies,
• Financial leasing companies, and
• Custody and settlement service providers under capital market regulations,
• Futures brokerage companies

are obliged to appoint a compliance officer.

4 – Creation of a Compliance Program

According to Article 5 of Law No. 5549, titled “Training, Internal Audit, Control and Risk Management Systems, and Other Measures,” it has been regulated that the Ministry of Finance is authorized to define the procedures and principles for determining the measures to be taken, including the appointment of the necessary authorized administrative personnel, based on the size of the enterprise and its business volume, to ensure compliance with the obligations imposed by this law.

In accordance with this article, the Ministry of Finance has prepared the Regulation on Compliance Programs for Preventing Money Laundering and Terrorism Financing, which was published in the Official Gazette on September 16, 2008, under number 26999.

The regulation defines the procedures and principles for the creation of compliance programs by obliged parties to prevent money laundering and terrorism financing.

The regulation requires banks (except for the Central Bank of the Republic of Turkey and development and investment banks), capital market intermediary institutions, insurance and pension companies, and Post and Telegraph Organization (limited to banking activities) to create a compliance program to prevent money laundering and terrorism financing. The program must include the following measures:

a) Creation of institutional policies and procedures,
b) Conducting risk management activities,
c) Conducting monitoring and control activities,
ç) Appointment of a compliance officer and establishment of a compliance unit,
d) Conducting training activities,
e) Conducting internal audit activities.

5 – Obligation to Provide Information and Documents

According to Article 7 of Law No. 5549, obliged parties are required to provide any requested information, documents, and records in any medium, and to make these records accessible or readable, along with any necessary information and passwords, to the Presidency and the auditing personnel.

Those from whom information or documents are requested may not refuse to provide them based on provisions in special laws, except as provided for in the right of defense.

6 – Retention and Presentation

Obligors are required, in accordance with Article 8 of Law No. 5549, to retain and present, upon request by the authorized authorities, all documents related to obligations and transactions under the law, in any form of medium, for a period of eight years starting from the date of document preparation, the date of the last entry in the books and records, and for identity verification documents, starting from the date of the last transaction. The retention period for identity verification documents related to the accounts held by the obligor starts from the date the account is closed.

Documents and records related to suspicious transaction reports submitted to the Presidency or internal notifications made to the compliance officer, documents attached to the report, written justifications for suspicious transactions where the compliance officer decides not to report, fall under the retention and presentation obligation.

7 – Continuous Reporting

In accordance with Article 6 of Law No. 5549, obligors are required to report transactions they are a party to or intermediating, exceeding the amount to be determined by the Ministry of Finance, to MASAK.

Public institutions and organizations, as well as public entities, may also be required to provide continuous information to MASAK.

8 – Electronic Notification

According to Article 9/A of Law No. 5549 on the Prevention of Money Laundering, notifications made under the Law No. 5549 and Law No. 6415 on the Prevention of the Financing of Terrorism may be delivered electronically, without adhering to the procedures set out in Article 7/A of the Notification Law No. 7201 regarding electronic notifications, and it may be requested that responses to the notification be provided electronically. It is stated that such notifications shall be deemed delivered once they are received by the recipient.

Additionally, the aforementioned article grants MASAK the authority to establish or utilize any existing technical infrastructure for electronic notifications, to mandate the use of an electronic address suitable for notifications, to require responses to be provided electronically, and to determine other procedures and principles regarding notifications made electronically.

In accordance with this authority, the “Regulation on the Electronic Notification System of the Financial Crimes Investigation Board” was prepared and published in the Official Gazette dated March 30, 2015, and numbered 29311.

According to this regulation, notifications made by MASAK under Law No. 5549 and Law No. 6415 will primarily be made electronically to banks, capital market intermediary institutions, financial leasing, factoring, finance companies, insurance and pension companies, portfolio management companies, the Central Securities Depository, and the Postal and Telegraph Organization. It is also stipulated that the obligated entities listed under Article 2, Paragraph 1, Item (d) of Law No. 5549 may apply to MASAK to receive electronic notifications under this regulation. If MASAK approves, electronic notifications will be made to such entities. The entity receiving electronic notifications must:

a) Submit the necessary information and documents to MASAK accurately and on time,

b) Immediately notify MASAK of any changes to the information provided in the application,

c) Comply with all conditions specified in the application form,

ç) Protect the access information provided after account creation, not share it with third parties, and not allow others to use it,

d) Immediately inform MASAK if they discover that their access information has unintentionally been accessed by third parties.

Sanctions

Administrative Fine

According to Article 13, paragraph 1 of Law No. 5549, a fine of 5,000 Turkish Lira will be imposed by MASAK for violations of the obligations and procedures stipulated in Article 3 (identity verification), Article 6 (continuous information provision), and Article 4, paragraph 1 (suspicious transaction reporting) of the same Law. If the obligated party is a bank, financing company, factoring company, financial leasing company, insurance and reinsurance company, pension company, capital market institution, or an authorized institution, the administrative fine will be doubled.

According to Article 13, paragraph 3 of the same Law, those who violate the obligations stated in Article 5 regarding training, internal auditing, control and risk management systems, and other measures will be given at least 30 days to rectify the deficiencies. If the deficiencies are not corrected within the given time frame, and the necessary measures are not taken, the administrative fines stipulated in Article 13, paragraph 1 of the Law will apply.

According to Article 88 of Law No. 6545, published in the Official Gazette on June 28, 2014, which added paragraph 5 to Article 13 of Law No. 5549, the total amount of administrative fines for violations of the identity verification, suspicious transaction reporting, continuous information provision obligations, and obligations related to training, internal auditing, control and risk management systems, and other measures will be capped at 10 million Turkish Lira for banks, financing companies, factoring companies, financial leasing companies, insurance and reinsurance companies, pension companies, capital market institutions, and authorized institutions, and 1 million Turkish Lira for other obligated parties, based on the year of the violation. If a violation of the same type occurs in the following year, these limits will be doubled.

Furthermore, according to paragraph 4 of Article 13, which was amended by Article 88 of Law No. 6545 published in the Official Gazette on June 28, 2014, those who fail to fulfill their obligations regarding electronic notification as per Article 9/A of the same Law will be fined 10,000 Turkish Lira per detection by the Presidency. The total administrative fine for such violations within one year will not exceed 250,000 Turkish Lira.

Criminal Penalties

According to Article 14 of Law No. 5549, those who violate the confidentiality obligation stipulated in Article 4, paragraph 2, regarding the “obligation of the obligated parties not to disclose the suspicious transaction reports to anyone other than the auditing authorities and courts,” and violations of the information and document provision obligation stated in Article 7, and the retention and submission obligation outlined in Article 8, will be sentenced to imprisonment from one to three years and a judicial fine of up to 5,000 days.

Penalty Amounts

According to paragraph 7 of Article 17 of the Misdemeanor Law No. 5326, administrative fines are increased each year based on the revaluation rate determined in accordance with Article 298 of the Tax Procedure Law No. 213 dated 4.1.1961, starting from the beginning of each calendar year. The fractional part of a Turkish Lira is not considered when calculating the administrative fine.

Moreover, Article 28 of Law No. 5549 states that the fixed amounts specified in Articles 13 and 16 of the same Law will be increased annually based on the revaluation rate determined according to Article 298 of the Tax Procedure Law No. 213, and that amounts up to 10 Turkish Lira will not be taken into account in the calculations.

As a result, the amounts of administrative fines for violations of obligations for the years 2015-2020 are shown in the table below.

(*) The total fine for each violation cannot exceed the above amount for the year in which the violation occurred. If the same type of violation occurs in the following year, the upper limit will be doubled.

(**) The total administrative fine for electronic notification violation cannot exceed the above amount within a year.

Date: 19/10/2020

Sender: Ödeme Hizmetleri A.Ş.