Turkey turns into haven for money launderers as Iran and Russia use Turkish banks to avoid sanctions

Abdullah Bozkurt/Stockholm

Turkey, already under scrutiny by the global money laundering watchdog FATF, for backsliding in the fight against money laundering and terrorist financing, has taken another step in boosting the illicit transfer of wealth without the authorities asking any questions.

The decision, put on the parliament’s agenda along with a last-minute amendment to a bill during an indoor debate, allowed the transfer of cash, gold and other assets to Turkey without the need to explain their origin and without sanctions imposed by the Turkish authorities.

The amendment was quickly approved by parliament, controlled by President Recep Tayyip Erdoğan’s Justice and Development Party (AKP), amid opposition protests that Turkey had become a haven for money laundering. money and illegal financing.

Over the past decade, Turkey under the corrupt Erdoğan regime has become a country where both state and non-state actors find it quite easy to park their money, especially using state banks, senior leaders politicians enriching themselves with undisclosed commissions on these transfers.

Iran and Russia have both tapped into Turkey’s banking system to circumvent sanctions imposed by the United States and its Western allies, while organized crime networks and jihadist terrorist organizations have been allowed to use Turkey as a plate. rotating to transfer funds.

The Wealth Amnesty Bill was hastily passed by the Turkish government:

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The amendment was put on the parliament’s agenda by Erdoğan’s party when lawmakers were debating Law No. 7417, which essentially introduced changes in the calculations of the public employment payroll. It had nothing to do with what the government called “wealth amnesty,” or varlık barışı in Turkish.

No provision was included for such an amnesty in the bill, and no amendments were proposed during the debate in the relevant parliamentary committee before it was sent to the prosecution. The aim was to avoid any discussion of the money laundering allegations. The opposition parties were informed of the amendment 10 minutes before it was tabled in the hemicycle, depriving them of the possibility of examining the text in depth and of filing motions to stop it or at least delay it.

When the bill was presented to the General Assembly for a final vote on July 1, 2022, a group of lawmakers led by Erdoğan confidant Mustafa Elitaş, a former minister, submitted the amendment. It was quickly approved with little debate about what the amendment actually entailed. It became law when it was signed by President Erdoğan four days later and published in the Official Gazette.

According to the amendment, individuals and entities have until May 31, 2023 to bring silver, gold and other capital wealth from abroad that had not previously been disclosed to Turkey. The bill in no way authorizes an audit or investigation of these assets, providing complete immunity to money launderers, drug traffickers and others who transfer their wealth to Turkey. Those who were already under investigation by government auditors will also be able to exploit this law if they claim that the controlled wealth was obtained through such transfers.

The government will not impose any tax on these transfers if the transferred funds have been kept in a bank for at least one year.

The opposition, taken by surprise by the last-minute amendment, protested the bill and claimed that the Erdoğan government was determined to turn Turkey into a money laundering hub. “If you pass laws that allow money laundering and turn Turkey into a center of money laundering with such amendments, it means that you are throwing this country into disaster,” said Abdüllatif Şener, an MP from the opposition Republican People’s Party (CHP). .

“You are introducing a bill that launders money from smuggling, drug trafficking, trafficking in women and terrorism, which should be criminally investigated. You are trying to do it from parliament,” he added.

He pointed out that the government had not included such a provision in the initial draft law and had not presented it in committee in order to hide its true intentions and limit the debate on the risks of adopting a such a bill. He accused the Erdoğan government of turning Turkey into a mafia state.

A money-counting machine and cash were found at the home of former Interior Minister Muammer Güler’s son, Barış Güler, on December 17, 2013.

This is not the first time the Erdoğan government has pushed for loopholes for people who bring money and assets into the country without asking questions about how they were earned or where they came from. . In 2016, a similar provision was passed by parliament, providing full immunity from criminal and administrative investigations into such transfers. The provision, meant to be temporary, has since been extended seven times.

The government did not reveal how much money was declared under the wealth amnesty in 2016 and the following year. The only figures made public were provided for the years 2018 and 2019 by a lawmaker from the ruling party during a debate in parliament in October 2020 – TL 16 billion and TL 17 billion, respectively. No figures were released for subsequent years.

In addition to the money that went to Turkey from criminal organizations and certain entities linked to foreign governments, President Erdoğan is also said to have brought in billions from abroad which he obtained through bribes. and bribes. Fearing that the United States would go after his wealth hidden abroad, he reportedly asked his cronies to secure his money by bringing it to Turkey under various schemes.

Erdoğan’s decision came after the United States House of Representatives on October 29, 2019 passed HR4695, the Protection from Conflict Turkey Act (PACT), which would have required the State Department to make report on the estimated net worth and known sources of income of Erdoğan and his family members, including assets, investments, other business interests and relevant beneficial ownership information. The secretary of state was reportedly instructed to consult with the secretary of the treasury and the director of national intelligence when preparing the report.

A US bill titled Protect Against Conflict by Turkey Act (PACT) mentioned the investigation into the wealth of the Turkish president and his family members:

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A similar provision regarding Erdoğan was also passed by the Senate in the Promotion of American National Security and Prevention of the Resurgence of ISIS Act of 2019 (S.2641).

Investigations into the transplants in 2013 revealed that Erdoğan and his associates received a huge amount of bribes from an Iranian agent named Reza Zarrab, who laundered Iranian government funds using the state bank Turkish Halkbank to avoid US sanctions. Again, the same investigations showed that Erdogan’s son Bilal secretly took money from former al-Qaeda financier Yasin al-Qadi, a close friend of the Turkish president.

With US and EU sanctions imposed on Russian oligarchs since the start of the Russian-Ukrainian conflict, Turkey has become an outlet for many Russians to store their wealth and tap into the banking system. The Erdoğan government publicly announced that it would not join Western sanctions, making Turkey the only NATO ally that imposed no sanctions on Russia for its invasion of Ukraine.

The crackdown on organized crime networks in Europe in recent years has also prompted many criminal figures to settle in Turkey and move their wealth there to protect it from seizure. Drug traffickers in particular have turned to Turkey to exploit the permissive environment offered by Erdoğan’s regime as long as they pay political leaders their due.

In October 2021, the Financial Action Task Force (FATF), the global money laundering and terrorist financing watchdog, placed Turkey on its gray list of countries as it found a number of shortcomings strategies in the fight against money laundering and the financing of terrorism. Turkey does not seem to care about the FATF designation as it still has not addressed these shortcomings. In fact, more loopholes were deliberately created by the Erdoğan government through legislative and administrative changes.