In a belated attempt to harmonize national laws to better reflect alignment with the requirements of its promises to the Organization of Economic Cooperation and Development (OECD) in the battle against money laundering and terrorism financing, the ruling Justice and Development Party (AK Party) recently pushed a bill to the relevant parliamentary commissions.
Turkey has been under pressure from its allies and international organizations to overhaul its legislation in financial crimes, especially with regard to anti-money laundering and combating the financing of terrorists known by the acronym AML/CFT. The Financial Action Task Force (FATF), a unit of the OECD, warned in July of last year that Turkey had failed to make sufficient progress in “implementing its action plan and that certain strategic AML/CFT,” though it acknowledged Turkey had taken steps toward improving its anti-money laundering and terrorist-funding policies by updating its legislation. FATF recommended Turkey address these deficiencies by adequately criminalizing terrorist financing and implementing an adequate legal framework for identifying and freezing terrorists' assets. The bill submitted to Parliament aims to correct these shortcomings by authorizing the Finance Ministry's Financial Crimes Investigation Board (MASAK) to freeze the properties of those who are involved in financing terrorism domestically or internationally without needing to obtain a judge's decree first.
The draft redefines the term “financing of terrorism” to include individuals and organizations who shore up terrorism at the national or international level by providing funds. Anyone who sends money to any of the terrorist organizations listed in relevant United Nations resolutions will be accepted as a criminal supporting terror. MASAK will freeze assets as a precautionary measure without applying to a court first if there is strong suspicion regarding an individual or organization. According to the annual performance report by MASAK, the agency reported 20,251 suspicious financial transactions to the police and prosecutor's office in 2010.
MASAK identified 4,078 people as seriously involved in money laundering or terrorism financing activities. It filed a criminal complaint with the prosecutor’s office over 121 individuals as terror financiers. MASAK also shared confidential details with government agencies on 6,034 individuals who were suspected of involvement in suspicious financial transactions. Most of the information involved drug trafficking charges while the rest dealt with tax evasion, loan sharking, racketeering and others.
Turkey is a long way from full compliance as it is currently fully in line with only one out of the 16 main standards of FATF, while it is largely compliant with five and only partly compliant with the remaining 10 standards.
The government submitted the draft prepared by the Justice Ministry to Parliament in February 2011 but the bill was dropped from the agenda when Parliament did not have time to examine the bill before the national elections on June 12, 2011. The government resent the bill to Parliament in the new legislative session on Oct. 21, 2011. The draft was debated at the Interior Commission, Planning and Budgetary Commission and Foreign Affairs Commission before being sent to the Justice Commission. Once the proceedings are finalized at the Justice Commission, it will be sent to the floor to be voted on.
One of the broadest changes introduced by the draft is in the definition of the financing of terrorism. The new definition will change Article 8 of the Counterterrorism Law (TMK), adopting a universal description of terrorism and discarding the existing local perspective by including terrorist activities from around the world as part of the fight to curb terrorism financing. The definition will include provisions outlined in the International Convention for the Suppression of the Financing of Terrorism, adopted by the UN General Assembly in December 1999 and ratified by Turkey in April 2002.
Additionally, the draft also introduces a mechanism to “freeze the properties” of persons and institutions involved in terrorism. Under this system, the resolutions of the United Nations Security Council will have a determinative effect. The seizure of assets will still be under the jurisdiction of the courts but the government may “freeze” assets suspected of being used in terrorism financing as a “preventive measure.” When the bill passes, the government will set up an Evaluation Commission on the Freeze of Assets (MDDK). This commission will examine requests coming from foreign entities and submit its decisions for approval or denial by the Cabinet.
The debate at the Interior Commission saw a heated exchange among deputies. While ruling AK Party and Nationalist Movement Party (MHP) deputies supported the bill, the pro-Kurdish Peace and Democracy Party (BDP), the political wing of the terrorist Kurdistan Workers’ Party (PKK) deputies opposed to it. Main opposition Republican People’s Party (CHP) deputies remain divided on the bill.
BDP Muş deputy Sırrı Sakık complained that businessmen in the predominantly Kurdish Southeast region have grievances with respect to the draft bill. Describing the bill as a “blood bill,” Sakık said legislative measures will not solve the problems [of the Kurdish issue] and suggested negotiations instead. Another BDP deputy, Sırrı Süreyya Önder, claimed that the definition of criteria by which suspects will be determined is lacking in the draft bill. “The worst part is that based on a usual suspect scenario, your whole commercial and other relations will be under close scrutiny. This is an operation to destroy the opposition [in Turkey],” Önder noted.
The government deputies countered, however, saying that authorities would look for a clear “intent” in providing funds to terrorist groups. A similar measure already exists in Article 220 of the Turkish Penal Code (TCK) that describes terrorism financing as a crime.
CHP İstanbul deputy Celal Dinçer also criticized the bill, saying that he has deep doubts whether the reciprocity principle will be applied. “Do you think the attitude of the US and the EU will be the same as ours? I do not think so,” he said during the debate at the Interior Commission. Dinçer remarked that approaches to terrorism financing vary among different states. “The criteria to be applied here is very vague. Preventive measures will continue to be extended. It does not look like the differences over who are terrorists will be resolved soon,” he explained. The CHP deputy joins the BDP in thinking that the bill will be likely used by the government to suppress the opposition in Turkey.
The CHP Parliamentary group deputy chairperson, Emine Ülker Tarhan, even went further by claiming that the government may freeze all the assets belonging to the main opposition party using this bill. Another CHP deputy, Dilek Akagün Yılmaz, described the bill as “very dangerous,” saying that “freedoms are under a threat with this draft.”
The CHP is also concerned that the government may go after municipalities run by CHP mayors using the bill. Prime Minister Recep Tayyip Erdoğan has claimed in the past that some CHP mayors transferred money provided by German funds to the PKK using front companies in public tenders. The government deputies noted that abuse of public authority was already regulated in the Penal Code and Anti-terrorism Legislation. It was also included in the draft bill on the financing of terrorism and not targeting specific mayors.
The government also underlined that the liability issues were addressed in the current bill in case there is a compensation lawsuit filed against Turkey because of a freeze request filed by a foreign government against a person or company in Turkey. The draft bill stipulates that the Turkish government may ask for cash or collateral guarantees from a foreign government against a future compensation lawsuit. While supporting the bill, the MHP criticized the government for delaying it.