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Turkey's New Crypto Legislation to Address FATF Concerns

Turkey Proposes New Crypto Legislation to Address FATF Concerns

136 Listen to this article In a move to strengthen its position with the Financial Action Task Force (FATF), Turkey […]

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In a move to strengthen its position with the Financial Action Task Force (FATF), Turkey is planning to introduce fresh cryptocurrency legislation. This development comes after Turkey found itself on the FATF’s “grey list” in 2021 due to concerns related to money laundering and terrorist financing. The proposed crypto legislation aims to address the specific issues outlined in the FATF’s 2021 report.

The FATF’s Grey List and Its Impact on Turkey

The FATF, an international body headquartered in Paris and established by the Group of Seven (G7) nations, plays a crucial role in setting global standards for anti-money laundering and combating the financing of terrorism. In 2021, the FATF’s decision to place Turkey on the “grey list” raised significant concerns. This move was a result of Turkey’s perceived shortcomings in addressing money laundering and terrorist financing under its existing legal framework.

Turkey’s Economic Challenges

The implications of being on the FATF grey list have been far-reaching for Turkey. The country was already grappling with pressing economic challenges, including double-digit inflation and high unemployment. The greylisting further exacerbated the situation, hindering Turkey’s efforts to rejuvenate its economy.

According to estimates provided by the International Monetary Fund (IMF), a country’s inclusion on the FATF grey list can lead to a substantial reduction in capital inflows, typically around 7.6% of its GDP. Additionally, foreign investments in Turkey experienced a significant decline, which posed a substantial hurdle for the nation’s economic revival.

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The Crypto Legislation’s Objectives

The Turkish Finance Minister, Mehmet Simsek, emphasized that the forthcoming crypto legislation is part of a comprehensive effort to meet the FATF’s 40-point compliance standards. These standards encompass a wide range of measures and regulations aimed at enhancing a country’s ability to combat money laundering and terrorist financing effectively.

Minister Simsek’s Statement

Minister Simsek stated, “We will present a legislative proposal regarding crypto-assets to the parliament at the earliest opportunity. Once that is accomplished, there should be no impediment to Turkey’s removal from the grey list, provided there are no other political considerations.”

Turkey’s New Crypto Framework

In addition to the crypto legislation, Turkey is in the process of developing a new regulatory framework specifically for cryptocurrencies. This framework will seek to define and tax crypto-assets, as well as regulate cryptocurrency exchanges and other related service providers.

Conclusion

Turkey’s move to address the concerns raised by the FATF is a significant step towards improving its standing on the international stage. The proposed cryptocurrency legislation, along with the broader regulatory framework for digital assets, reflects Turkey’s commitment to aligning with international standards in the fight against money laundering and terrorist financing. Successfully implementing these measures may help pave the way for Turkey’s removal from the FATF’s grey list and attract much-needed foreign investment.

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