Cablegate: Terrorist Finance: Follow-Up On Illicit Cash


DE RUEHAK #2745/01 3130819
R 090819Z NOV 07





E.O. 12958: N/A


1. We spoke with Ergin Ergul, Deputy Director General for
Foreign Relations at the Justice Ministry. His comments
related to questions in reftel are shown below. In addition,
we have included information from the April 2007 Financial
Action Task Force review of Turkey, which are relevant to
this issue.

2. Status of host nation laws specifically criminalizing
bulk cash smuggling and key elements of those laws: described
in para three below.

3. Cross-border reporting requirements for inbound/outbound
movement of currency and monetary instruments: There is a
declaration requirement for taking $5,000 (or equivalent of
any other currency) and above out of Turkey. There is no
declaration requirement for incoming cash in any amount.
While Turkey currently has a limited declaration system
related to movement of currencies worth over USD 5,000, the
Anti Money Laundering law (Law 5549 of October 2006) provides
for a more comprehensive system to be implemented.

4. Host country actions to interdict potential cash couriers
or to throw risk into the system: If the Customs authority
is suspicious of the amount carried, or of the person
carrying it, Customs can appeal to MASAK (Turkey's Financial
Intelligence Unit) and report the amount as a suspicious
action. If MASAK is convinced that the cash is linked to
money laundering or terrorist finance, MASAK carries out the
necessary investigation and turns the case over to a GOT
prosecutor for litigation.

5. Status of investigations into bulk cash smuggling: no
information available

6. Prosecutions under bulk cash smuggling laws: no
information available

7. How mission elements have engaged relevant partners to
develop and execute a cash courier interdiction plan: The
Regional Legal Advisor at Embassy Ankara hosted a seminar in
Istanbul on October 31-November 1, 2007, on Anti Money
Laundering (AML) and Countering Terrorist Finance (CTF). The
Regional Legal Advisor at Embassy Ankara hosted a seminar on
October 31-November 1, on AML/CTF issues. Participants
included more than 50 judges, prosecutors, bank compliance
officers, banking regulators, MASAK, and Ministry of Justice
officials. On the U.S. side, representatives from the
Department of Justice, Federal Bureau of Investigation, and
State Department participated. The conference allowed for an
open discussion of the AML and CTF process, along with
discussions of suspicious transaction reports, banking
compliance issues, and legal concerns related to AML/CTF.
Participants compared success stories and discussed ways to
improve the current system to achieve more successful
prosecutions of AML and CTF cases.

8. From the 300-page April 2007 Financial Action Task Force
Report on Turkey, authored in part by a U.S. Treasury
Department official: The GOT recently passed a number of key
laws relating to anti-money laundering (AML) and countering
terrorist finance (CTF). A new money laundering offense was
introduced in June 2005, and a stand-alone terrorist
financing offense was introduced in July 2006. The
confiscation framework in Turkey appears to meet most of the
standards, but has not yet produced substantial results.
Turkey has weak systems of implementation of S/RES/1267
(1999) and S/RES/1373 (2001). The new AML law (Law 5549 of
October 2006) provides, among other things, for a more
comprehensive system of disclosures of cross-border movements
of cash and monetary instruments to be implemented in the
near future.

After the establishment of the Turkish Republic in 1923,
certain laws and codes promulgated were strongly inspired by
those of other European civil law jurisdictions. The
Government of Turkey has in recent years embarked on a
program of legislative renewal, in part related to
anticipated accession to the EU. Overall, Turkey's legal
requirements to combat ML and TF are generally comprehensive.
The legislative renewal program has strengthened the AML/CTF
system, though, due to the recent implementation of a number
of key laws, many elements of the system's effectiveness have
not yet been tested.

Competent authorities are capable, committed and actively
involved in the Turkish AML/CTF system. Prosecutors and
judges do seem, however, to have limited awareness of AML/CTF

issues. As the TF offense was enacted recently, the CTF
training of all authorities and of the financial sector is so
far insufficient. Competent authorities do not have an
adequate structure and sufficient technical staff and other
resources for full AML/CTF supervision of the insurance
sector. The FIU is not adequately resourced with staff who
have a law enforcement background. Also the need for a
Council of Ministers' decree for a MASAK memorandum of
understanding to enter into force is too restrictive. The
Customs Service does not seem to have sufficient funding and
staff for undertaking its functions, and this may lead to
inadequate attention to AML/CTF issues.

The primary method for laundering funds seen in 246 referrals
made by MASAK are money transfers and other banking
transactions (21 percent), commercial transactions and
accounting records (14 percent), purchasing real estate (13
percent), physical transfers abroad (four percent), foreign
commercial transactions (three percent), shell companies
(three percent), and use of counterfeit documents and
invoices (three percent).

Following the introduction of AML measures, in particular
customer due diligence and suspicious transaction reporting,
there has been an increase in attempts to open accounts in
the names of third persons. A decreased use of large bank
transfers and decreased use of cross-border carrying of cash
has been detected. According to Turkish authorities, the
ability to conduct non face-to-face transactions due to
technological developments is seen as a ML threat on the near

The Undersecretariat of Customs has a board of inspection and
investigation and sends reports on violations of legislation
and major smuggling cases to MASAK. It is responsible for
laws relating to the cross border movement of cash, and sends
copies of foreign currency declaration forms to MASAK.
Customs enforcement units for anti-smuggling, intelligence,
and narcotics combat all types of smuggling cases.

The number of ML prosecutions in Turkey is very low, and no
finalized convictions have yet been achieved. The new ML
offense, the scope of which is broader than the previous
offense, is as yet untested. This may provide for an
increase in the number of prosecutions in the future.

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