Global money-laundering watchdog the Financial Action Task Force (FATF) placed Turkey under surveillance on Thursday for shortcomings in combatting money laundering and terrorism financing, Agence France-Presse reported.
“Serious issues remain” in Turkey’s controls over financial operations, FATF head Marcus Pleyer said as the body placed Turkey on its grey list of countries under increased monitoring due to strategic deficiencies in their regimes to combat money laundering and terrorist financing.
Citing two Western officials, Financial Times reported on Wednesday that Turkey was set to be “grey listed” by FATF.
The move is likely to further dent Turkey’s already limited ability to attract crucial foreign capital.
It comes as foreign investment in Turkey is already close to the lowest level reached during President Recep Tayyip Erdoğan’s almost 20 years at the helm.
Political instability and concerns over political interference in monetary policy and the rule of law have served to scare away foreign money vital for financing the country’s chronic trade deficit and fueling economic growth.
The grey-listing is likely to strike a further blow at a time when the Turkish lira, which has lost more than 20 percent of its value against the dollar this year, hit a succession of record lows on Thursday as the country’s central bank cut its benchmark interest rate again.
FATF was founded in 1989 to combat money laundering, terror financing and other similar threats to the integrity of the international financial system.
Turkey was put on notice by the body in a report published in December 2019. While it said that Ankara understood “the risks it faces from money laundering and terrorist financing,” it found “serious shortcomings in the country’s framework to combat these crimes.”