Turkey celebrates FATF exit from the Financial Action Task Force (FATF) “grey list” of countries under special scrutiny, marking a significant victory in its efforts to combat financial crime and attract foreign investment.
Minister Şimşek’s Announcement and International Recognition
Treasury and Finance Minister Mehmet Şimşek announced the decision on social media platform X, writing “We did it” alongside a Turkish flag emoji. He was in Singapore for the FATF plenary meeting.
The Paris-based watchdog, in a statement following the meeting, said Turkey had made “significant progress” in improving its anti-money laundering and counter-terrorist financing (AML/CFT) regime.
Positive Impacts on International Standing and Investments
Turkish officials welcomed the decision, which is expected to enhance the country’s international standing and potentially attract new investments. Turkey celebrates FATF exit as a major milestone.
“With this development, the confidence of international investors in our country’s financial system has increased even further,” Vice President Cevdet Yılmaz said on X.
“The decision will have extremely positive results for both our financial sector and our real sector,” Yılmaz added. Just a day earlier, he had said that failing to remove Turkey from the grey list would be a political decision.
FATF President T. Raja Kumar said Turkey was removed from the grey list due to the “significant progress” it had made. He confirmed that an FATF team visited Turkey in May and verified that the country had taken “important steps” to improve its AML/CFT regime, addressing all items in its action plan.
As an example, he pointed to Turkey’s complex investigations and prosecutions related to money laundering and terrorist financing.
Interior Minister Ali Yerlikaya said Turkey would continue its determined fight against organized crime.
“We will continue our fight against organized crime organizations, poison (drug) dealers, migrant smuggling networks, criminal groups involved in money laundering, and especially the financing of terrorism and traitors,” he said on X.
Market Reactions and Positive Outlook
The market reacted little to the long-awaited move, with the Turkish lira edging up slightly to 32.8845 against the dollar. The BIST 100 index rose 0.5%.
“The good news on Turkey and reforms from (Treasury and Finance Minister Mehmet) Şimşek just keep on coming,” said Tim Ash, a strategist at Bluebay Asset Management.
The FATF, which was established by the G-7 to safeguard the global financial system, said in February that Turkey had “largely completed its action plan” and warranted an on-site assessment. The body held talks recently to assess the progress made in addressing money laundering and illicit finance concerns in Turkey.
Research suggests that the upgrade could bring in more foreign direct investment, and Yılmaz said inflows would accelerate.
The International Investors Association reported that Turkey’s foreign direct investment (FDI) inflows in the first quarter were $1.5 billion. This is 52% lower than the quarterly average over the past three years.
Investor Interest Surges in Turkey
Turkey has emerged as a new investment hub following a radical shift in economic policies after the May 2023 elections. The country has moved away from loose monetary policies and raised interest rates from 8.5% to 50%. This demonstrates its commitment to achieving macroeconomic stability and controlling inflation.
This bold policy change has renewed investor confidence in Turkey. Consequently, it has increased interest in the opportunities the country offers. The new economic administration, with its experienced and reputable team, aims to create an investor-friendly environment.
With its young and dynamic population, strategic location, and strong production capacity, Turkey remains an attractive market for investors. With its new economic policies, the country is gaining investor confidence and moving towards sustainable growth and stability. Turkey celebrates FATF exit as a testament to its commitment to financial reform and stability.
For more information about investment in Turkey, check out Turkey for Business
