To separate clients form money launderers and criminals some measures need to be implemented by financial institutions.
• Know Your Customer (KYC)
• Keep Records
• List down possible suspicious transactions
Customer Identification principle is the most important step for differentiating customers from launderers in banks. The purpose of this procedure is to ensure openness and transparency in customer transactions. FATF has some regulations for financial institutions to apply to prevent organizations from money-laundering activities. Banks should follow the rules about their clients below for their safety:
• Knowing the customers’ real identity and address,
• Checking the validity of the customers’ documents and information,
• Knowing the reasons of the customers’ preference of the bank and the purpose of opening an account within the financial institution,
• Knowing the profession, main profit-based activities, and professional principles of the client,
• Knowing the capacity of the customers’ transactions,
• Knowing the suppliers or the buyers of the client,
• Knowing the location of the customers’ office.
• Financial Institutions should receive customer information forms from each client including persons and organizations. Customers’ information on the forms could be shared under the needed circumstances. The clients should fill up the information forms based on trust and transparency.
• Financial institutions should not open any kind of bank account with missing information or an anonymous name.
• Banks should screen and keep the records of the accounts to check if they are used by the client with a name associated to the account.
• Banks should not accept to open an account under the name of a third person or more than one person. If the client can legally authorize to issue such transaction and the reasons for that transaction are reasonable, then the bank can approve the process.
• General instructions should be certified by the notary. The documents subject to a transaction should be confirmed by the related organization.
• In minors’ accounts age restrictions should be applied.
Developing Challenges in Turkish Money Laundering Applications
According to the gathered data of MASAK December 2011, The Turkish money-laundering regulations haven’t been merged with Directive 2005/60/EC yet. The 2005 directive is about ‘the prevention of the use of the financial system for the purpose of money laundering and terrorist financing’ . . . On the other hand, the Law of Prevention of Laundering of the Proceeds of Crime includes regulations for avoiding the purpose of using the financial systems for money-laundering activities is supported by the Directive 91/308/EEC.
• Large and complex transactions, and
• Transactions with no rational financial purpose.
While undertaking such transactions, the involved sides should keep the records and documents to present the information to the related authorities when needed.
Technology could be very useful for criminals to launder money. For that reason, involved parts within a financial transaction should take some precautions against technological risks. Financial institutions need to pay special attention when depositing cash in bank accounts, withdrawing cash, and transferring money electronically. Financial institutions also need to pay attention while establishing trade relations with people or organizations. Involved parties should collect information about the transaction and the other side to protect their side from money-laundering type of activities.
In addition to the informationabove, FATF has pointed some additional requirements about Turkey’s money-laundering regulations. According to FATF, MASAK should start providing feedback according to STR’s requirements. The feedback report should include when and how to report suspicious transactions. According to FATF’s published public statement in 2011, Turkey is in the list of the countries that have not progressed in addressing the deficiencies or an action plan to point out those flaws. These deficiencies include the crime of financing terrorist activities and implementation of legal outline for identifying and preventing terrorist activities.