The FATF, an international body that sets the global standards for anti-money laundering and combating the financing of terrorism, decided not to suspend Turkey’s FATF membership last February after Turkey enacted a law to fight terrorism financing.
The FATF, which has 34 member countries and two regional organizations as members, held a plenary session in Paris from Feb. 12-14.
FATF considers Turkey among “jurisdictions with strategic anti-money laundering and combating the financing of terrorism (AML/CFT) deficiencies that have not made sufficient progress in addressing the deficiencies or have not committed to an action plan developed with the FATF to address the deficiencies.” Other countries in this category, commonly known as the “gray list,” are Algeria, Indonesia, Yemen, Syria, Ecuador, Ethiopia, Kenya, Myanmar, Pakistan and Tanzania.
Recent press reports in Turkey claimed that the organization was going to put Turkey on its blacklist — which includes “non-cooperative” countries — at its meeting in Paris. Finance Minister Mehmet Şimşek has refuted these reports on Twitter.
yOn Thursday Şimşek tweeted that he had talked to the head of the Finance Ministry’s Financial Crimes Investigation Board (MASAK) about the FATF meeting in Paris, adding that contrary to reports in the Turkish press, there was no mention of “corruption, bribery or Iran” during the FATF meetings.
“The FATF, in its statement, will state that Turkey’s laws with regard to terrorism financing now to a large extent meet the criteria,” Şimşek said in another tweet.
There are only two countries on the FATF’s so called blacklist, Iran and North Korea. They were placed on the list due to their “failure to address the risk of terrorist financing and the threat this poses to the integrity of the international financial system,” according to a FATF statement.
In a statement on Feb. 22, 2013, the FATF said it had decided not to suspend Turkey’s membership. In an October 2012 statement conveying the organization’s “deep concerns about Turkey’s continued failure to take action to fully criminalise terrorist financing and establish an adequate legal framework for identifying and freezing terrorist assets consistent with the FATF recommendations,” the FATF warned that Turkey’s membership would be suspended on Feb. 22, 2013 unless Turkey passed legislation “to remedy deficiencies in its terrorist financing offence and establish a legal framework for identifying and freezing terrorist assets consistent with the FATF recommendations before that date.” After this warning, the Turkish Parliament passed a law on the prevention of terrorism financing. It was signed into law on Feb. 15, 2013.
The FATF has welcomed this “significant step” to improve the country’s compliance with international standards and decided not to suspend Turkey’s membership.
“In spite of this positive step [passing legislation], there still remain a number of ongoing shortcomings in the Turkish counter-terrorist financing regime. Turkey must address these shortcomings in order to reach a satisfactory level of compliance with the FATF standards,” it said.
According to its website, the FATF, sponsored by the Organization for Economic Co-operation and Development (OECD), is an international body that sets the global standard for anti-money laundering and combating terrorism finance and works to encourage compliance with those standards. In that capacity, it identifies countries with deficiencies that pose a risk to the international finance system and, based on a review by the International Co-operation Review Group (ICRG), jurisdictions may be publicly identified in one of the two FATF public documents that are issued three times a year.
Former US Treasury terrorism finance analyst and current Foundation for Defense of Democracies Vice President for Research Jonathan Schanzer told Sunday’s Zaman that Turkey’s remaining on the FATF gray list means that Turkey’s laws and capabilities to counter terrorism financing are insufficient.
“Turkey passed a law last year that prevented it from being blacklisted. This bought Ankara more time. Still, the fact that Turkey remains on the gray list is a troubling sign that it is out of compliance with its international obligations,” Schanzer wrote in an email to Sunday’s Zaman.
Turkey was initially placed on the gray list in February 2012 due to its failure to comply with a UN Security Council resolution to freeze assets owned by individuals affiliated with al-Qaeda and the Taliban. Turkey dragged its feet on complying with the resolution, but gave into international pressure and enacted a law against the financing of terrorism in 2013.
According to the law, those who finance or collect money for terrorist groups or people involved with such groups face five-to-10 year prison sentences. Terrorism financiers are defined in the law as individuals and organizations that support terrorism at the national or international level by providing funds, and any person who sends money to a terrorist organization listed in the relevant United Nations Security Council resolutions.
“There are many problematic areas. The West has a different view, different definitions and different laws with regard to terrorism financing when compared to Turkey. Still, Turkey remains on the list in order to put more pressure on Turkey to change its laws accordingly. Turkey may not share some of the sensitivities of the US, for example,” Economic Policy Research Foundation of Turkey (TEPAV) terrorism expert Nihat Ali Özcan told Sunday’s Zaman.
“A bill on terrorism financing was passed last year but its implementation is also important,” Özcan added.
Turkey has also decided to implement recommendations from the UN Security Council on the issue. The recommendations were published in the Official Gazette in October 2013 and ordered the freezing of the assets of 130 people and four corporations that have links to the Taliban and 219 individuals and 63 corporations with ties to al-Qaeda.
US Ambassador to Turkey Francis Ricciardone said last February that the FATF had learned that Turkey’s legal definition of terrorism is out of step with international standards. Turkey defines terrorism as an act against the Turkish state; its definition of international terrorism is unclear. FATF experts came to Turkey in 2012 to review the draft legislation before it was adopted last year and pointed out deficiencies in terms of international standards. But the law still fails to meet the FATF’s criteria, experts say.
Allegations that Turkey helped Saudi businessman Yasin al-Qadi — listed by the US Treasury as a “specially designated global terrorist” — to evade UN sanctions may give Turkey the image of a country that supports terrorism and ignores international law.
“The interesting thing about the al-Qadi issue is that when he was first designated, his front companies were all based in Turkey … and he had quite a bit of operations on Turkish soil,” Schanzer said, according to a report published on Business Insider’s website in January this year.
Washington increasingly aware of AK Party activities
Asked whether he thought Turkey could ever be put on the US State Department’s list of state sponsors of terrorism, Schanzer said: “Washington does not have the stomach to put Turkey on the list of state sponsors of terrorism. Turkey is a NATO ally and US partner on many important issues. That said, Washington has become increasingly aware of the terrorism finance and material support activities of the AKP (the ruling Justice and Development Party) government.”
“Questions surrounding Iran sanctions-busting, Hamas, İHH (Humanitarian Aid Foundation), Yasin al-Qadi, FATF and Syrian jihadis have been persistently troubling. One gets a sense that if the State Department and the Treasury held Turkey to the same standards as Sudan or Iran, for example, Turkey might qualify. But again, Washington would not go to these lengths right now,” Schanzer said.
While Turkish government officials float the idea that there is an “international plot” to drag Turkey down, Schanzer said: “All of this serves as a warning to Ankara — and to Washington — that these are issues that must be resolved. The failure to resolve them now could allow the problem to grow and spread. And that could lead to blacklistings in the future.”
The US Treasury announced last week that an al-Qaeda network based in Iran is helping to transport fighters and money to Syria via Turkey.
“Today the US Department of the Treasury announced the designation of a key Iran-based al-Qa’ida facilitator who supports al-Qa’ida’s vital facilitation network in Iran, that operates there with the knowledge of Iranian authorities,” the Treasury Department wrote in a statement on its website on Thursday, Feb. 7, announcing actions “targeting a diverse set of entities and individuals located around the world for evading US sanctions against Iran, aiding Iranian nuclear and missile proliferation, and supporting terrorism.”
“The network also uses Iran as a transit point for moving funding and foreign fighters through Turkey to support al-Qa’ida-affiliated elements in Syria, including the al-Nusrah Front,” it added.