The Financial Action Task Force (FATF) gathered in Paris, France on February 14th for a plenary session to analyze the efforts of its 36 member countries and of another 180 jurisdictions around the world in combating the financing of terrorism. In this last session, particular scrutiny was placed on the member country of Turkey, which was at risk of being blacklisted for its reluctance and non-compliance to follow anti-terrorism financing guidelines set up by FATF. With a plummeting currency, a debilitating internal political imbroglio that has no end in sight, and a weakening relationship with the West, the stage had been set for a decision that could further push the country into further isolation and turmoil.
The FATF is the inter-governmental body that was established in 1989 by the Group of Seven (G-7). From the beginning, the FATF focused on developing specific proposals to combat money laundering. However, following the September 11 terrorist attacks in the United States, the FATF issued 8 Special Recommendations on Terrorism Financing, enlarging its mandate by encapsulating efforts to combat the financing of terrorists as well. In pursuit of this new goal, the FATF has employed a new practice of blacklisting countries that the organization assesses as deliberately dealing in or ignoring corruption and illicit finance.
In Paris, FATF urged that Turkey, the only NATO country on FATF’s gray list, needed to tighten laws blocking the financing of terrorist groups or face disciplinary action by the FATF. Specifically, FATF requested that the Turkish government criminalize the act of terrorist financing, establish a legal framework for identifying terrorist assets, confront inadequate monitoring of bank transfers, as well as freezing the accounts of suspected terrorists.
If Turkey did not comply, it would face suspension from the body as well as being downgraded by the task force. This would have inevitably placed the country on the black list alongside Iran and North Korea. More importantly, this label would have farther reaching implications than simply being branded as a willing supporter or completely negligent when it came to enforcing terrorism financing laws. In particular, this blacklisting could restrict Turkish banks foreign activity with Western banks, thereby affecting the credit rating of Turkey (Standard & Poor’s in fact downgraded Turkey’s credit rating ahead of the Paris meeting) and would hurt the country’s ability to raise funds internationally.
The United States has continuously raised concerns and complaints both privately and publicly for Turkey’s at times indiscriminate funding of al-Qaeda affiliated groups in the region, specifically those in the Syrian Civil War. The U.S. Ambassador to Turkey, Francis Riccardione, has pressed the Turkish government (and President Erdogan’ specifically) to upgrade its capabilities in combating terror financing by enhancing its terror financing legislation stating,“existing laws focused on attacks in Turkey were inadequate when it came to international terrorism.”
Turkey and the Turkish Grand National Assembly, under immense pressure and at the threat of expulsion ahead of a FATF deadline, agreed to finally pass an anti-terrorism financing bill. The bill, named the Law on the Financing of Terrorism, addressed several of the deficiencies and shortcomings identified by the FATF, and in doing so, brought some anti-terror regulations up to par with those in European nations.
At this latest meeting FATF welcomed this significant step made by Turkey, which improved the country’s compliance with some international standards. As a consequence, FATF has decided not to suspend Turkey’s membership. However, because of other additional concerns that were not addressed, it was still left on the gray list with the countries including Algeria, Ecuador, Ethiopia, Indonesia, Myanmar, Pakistan, Syria, and Yemen. It would seem that Turkey is still not out of clear, and will be closely watched by political, financial, and security analysts for months to come. As Jonathan Schanzer, former terrorism finance analyst at the treasury stated, “Turkey’s terrorism finance problem is growing but has not reached the blatantly rogue state levels of Iran and North Korea, the only two blacklisted countries.”