Turkey’s progress in strengthening measures to tackle money laundering and terrorist financing have not been sufficient in the past year to secure its removal from the Paris-based Financial Action Task Force’s (FATF) “grey list”.

Turkey still shows strategic deficiencies in complying with recommendations made by the global watchdog, FATF said in a just-published July 2023 assessment.

FATF grey-listed Turkey in October 2021.

Turkey’s has a controversial “wealth amnesty” law that allows individuals and companies to repatriate previously undisclosed cash, gold, FX, securities and other assets held abroad, or declare assets held in Turkey, without facing any questioning on the source of those assets or incurring of a tax penalty.

The latest FATF report on Turkey urged the country’s government to pursue more complex money laundering investigations and prosecutions and to undertake more financial investigations in terrorism cases. Additionally, the country was advised to prioritise investigations and prosecutions related to UN-designated terrorist groups.

Turkey needed to strengthen its financial regulatory framework, enhance law enforcement efforts and cooperate internationally to prevent money laundering and terrorist financing activities, the report added.

Given its grey list status, Turkey is subject to enhanced monitoring by FATF, a fact that has negative consequences for the country's financial and economic standing. The status pushes up risk premiums in borrowing as international lenders perceive higher risks associated with lending to Turkey.

Being on the grey list is also an impediment to attracting foreign investment.