Turkey’s banking sector has escaped being put on an international blacklist, but it might yet be turfed out of a club that battles terrorist financing and money laundering.
For the moment, investors buying Turkish bank bonds in record volumes don’t seem to mind. But, given the uncertainty in world financial markets – and Turkey’s location near the crisis-torn Middle East – they might be wise to pay more attention to the dispute between Ankara and the 36-member Financial Action Task Force over Turkey’s failure to enact key anti-terrorist financing laws.
In June, FATF warned Ankara that “if Turkey does not take significant actions by October 2012, the FATF will call upon its members to apply counter-measures proportionate to the risks associated with Turkey”.
This was strong stuff: at present FATF lists only Iran and North Korea as “jurisdictions subject to… counter-measures to protect the international financial system from the on-going and substantial money laundering and terrorist financing risks”.