2004-2005 INTERNATIONAL NARCOTICS CONTROL STRATEGY

UNCLAS SECTION 01 OF 07 ANKARA 000423

SIPDIS

JUSTICE FOR OIA, AFMLS, AND NDDS
TREASURY FOR FINCEN
DEA FOR OILS AND OFFICE OF DIVERSION CONTROL
EUR/SE; INL

E.O. 12958: N/A
TAGS: SNAR KTFN PTER TU
SUBJECT: 2004-2005 INTERNATIONAL NARCOTICS CONTROL STRATEGY
REPORT (INCSR) FOR TURKEY

REF: A. 2004 STATE 248987


B. 2004 STATE 254401

C. THOMPSONKW - LOSBANOSMG E-MAIL 2005 25 JANUARY


Following is the 2004-2005 INCSR report for Turkey.

As discussed with INL ref c, Post is continuing to seek
answers to some of ref b's specific questions on legal issues
for the money laundering section and will send a follow-up
cable.


I. Summary:

Turkey is a major transit route for Southwest Asian opiates
to Europe, and serves as a base for major narcotics
traffickers and brokers. Turkish law enforcement
organizations focus their efforts on stemming the traffic of
drugs and intercepting precursor chemicals. Turkish forces
cooperate closely with European and U.S. agencies. While
most of the heroin trafficked via Turkey is marketed in
Western Europe, an increasing amount of heroin and opium also
is smuggled from Turkey to the U.S. There is no appreciable
cultivation of illicit narcotics in Turkey other than
marijuana grown primarily for domestic consumption. We are
unaware of any diversion from Turkey's licit opium poppy
cultivation and pharmaceutical morphine production program.

Turkey signed the UN Drug Convention in 1988 and ratified the
agreement in 1996. Turkey is a member of the Financial
Action Task Force (FATF). The U.S. terminated its USD
500,000 annual assistance program at the end of FY 1999, due
to Turkey's refusal to provide Leahy Amendment certification
in an agreement. End summary.

II. Status of the Country:

Turkey is a major transshipment and opium conversion point
for heroin. Turkey is also a base of operations for
international narcotics traffickers and associates
trafficking in opium, morphine base, heroin, precursor
chemicals and other drugs. The majority of these opiates
originate in Afghanistan, and are ultimately shipped to
Western Europe. A smaller but still significant amount of
heroin is trafficked to the U.S. via Turkey, and indirectly
through Europe.

Turkish law enforcement forces are strongly committed to
disrupting narcotics trafficking. The Turkish National
Police (TNP) remains Turkey's most sophisticated
counter-narcotics force, while the Jandarma and Customs
continue to increase their efficacy.

Turkish authorities continue to seize large amounts of heroin
and precursor chemicals, such as acetic anhydride. It is
estimated that multi-ton amounts of heroin are processed in
or smuggled through Turkey each month.

Turkey is one of the two traditional opium-growing countries
recognized by the USG and the International Narcotics Control
Board. There is no appreciable illicit drug cultivation in
Turkey other than marijuana grown primarily for domestic
consumption. The Turkish Government maintains strict control
over its licit poppy program.

Turkish law enforcement authorities continue to seize large
quantities of synthetic drugs that have been manufactured in
Northern and Eastern European countries. The majority of the
synthetic drug seizures have occurred as the drugs were being
shipped through Turkey to other countries in the Middle East.

III. Country Actions against Drugs:

(a) Policy Initiatives: The GOT devotes significant financial
and human resources to counter-narcotics activities. Turkey
continues to play a key role in Operation Containment (a
regional program to reduce the flow of Afghan heroin to
Western Europe) as well as in other regional efforts.

The Turkish International Academy against Drugs and Organized
Crime (TADOC),established under the Turkish National Police
(TNP),continues to be the key agency leading the fight
against drug abuse in Turkey. TADOC regularly organizes
meetings in which members from relevant government agencies,
such as experts from the Ministries of Education and Health,
participate. In 2004, TNP increased the number of drug
training and prevention units it previously established in
various provinces, to cover most parts of Turkey. These
units conducted intensive training programs for parents,
teachers and students in these provinces, making a major
contribution to the GOT,s drug prevention efforts.
TADOC was also appointed as the lead agency in dealings with
the European Monitoring Center for Drugs and Drug Addiction
(EMCDDA) in 2003. TADOC expects the GOT to sign the
agreement making Turkey a member of EMCDDA in January 2005.
Since all the members of EMCDDA are EU member countries,
Turkey will be an exception.
(b) Accomplishments: TADOC organized 79 training programs for
local and regional law enforcement officers in 2004, mostly
on narcotics smuggling and money laundering. The USG
provided three of these training programs. A total of 257
foreign officers were trained at TADOC this year, including
officers from the Balkans, Central Asia and Afghanistan.
Syrian officials received counter-narcotics training for the
first time at TADOC this year.

The UN conducted a drug abuse survey in 6 major cities in
Turkey in 2004, which showed that there was no major increase
in drug abuse in Turkey in the last couple of years.
TADOC,s academy director attributed this to the TNP,s
intensive training and prevention efforts throughout Turkey.

(c) Law Enforcement Efforts: Through 22 December 2004,
Turkish law enforcement agencies seized 7.2 tons of heroin,
4.7 tons of morphine base, 7.7 million dosage units of
synthetic drugs, 8.6 tons of hashish and 123.6 kilograms of
cocaine. In addition, the GOT law enforcement authorities
have made more than 14,117 drug-related arrests.

(d) Corruption: In June 2003 a Parliamentary Commission on
Corruption issued a report examining the reasons for and
possible solutions to the problem of government corruption.
It recommended increased transparency in public
administration, strengthened audits, hiring of more qualified
personnel, adoption of international judicial standards, and
increased public and business education.

The GOT continued to struggle against corruption in 2004.
The Parliamentary Commission on Corruption conducted detailed
investigations into one former prime minister and five former
ministers, most of which were sent to the Supreme Court. The
court cases for these officials have not yet been finalized.

An important step the GOT took against corruption in 2004 was
preparing the Draft Law on Combating Corruption, which is
currently on the General Assembly,s agenda. The law defines
the crimes that fall under corruption, as well as the
prosecution procedures for these crimes. The law also calls
for periodical training of public sector personnel on work
ethics and corruption. Another law the GOT submitted to the
Parliament this year that is still waiting for the
Commission,s approval is the law making December 9 an
Anti-Corruption Day in Turkey.

In 2003 the GOT ratified the Convention on Combating Bribery
of Foreign Public Officials in International Transactions;
the Council of Europe's Civil Law on Corruption; and the UN
Convention Against Corruption. In January 2004, the GOT
ratified the Council of Europe's Criminal Law on Corruption
and became a member of the Group of Countries against
Corruption (GRECO).

(e) Agreements and Treaties: Turkey ratified the 1988 UN Drug
Convention in 1996 and has been a member of FATF since 1991.
Turkey ratified the UN Convention on the Suppression of
Terrorist Financing in April 2002. In 2003 Turkey ratified
the UN Convention against Transnational Organized Crime.

In February 2003 Turkey signed a Precursors Agreement with
the EU, to combat the production of substances used in the
manufacture of narcotic drugs and psychotropic substances.
Turkey ratified the Precursors Agreement in April 2004.

(f) Cultivation/Production: Illicit drug cultivation,
primarily marijuana, is minor and has no impact on the United
States. The Turkish Grain Board, with no apparent diversion,
strictly controls licit opium poppy cultivation.

(g) Drug Flow/Transit: Turkey remains a major route, and
storage, production and staging area, for the flow of heroin
to Europe. Turkish-based traffickers and brokers operate in
conjunction with narcotic smugglers, laboratory operators,
and money launderers in and outside Turkey. They finance and
control the smuggling of opiates to and from Turkey.
Afghanistan is the source of most of the opiates reaching
Turkey. Morphine and heroin base are smuggled overland from
Pakistan via Iran. Multi-ton quantities of opiates and
hashish have been smuggled by sea from Pakistan to points
along the Mediterranean, Aegean, and/or Marmara seas.
Opiates and hashish also are smuggled to Turkey overland from
Afghanistan via Turkmenistan, Azerbaijan, and Georgia.
Traffickers in Turkey illegally acquire the heroin precursor
chemical acetic anhydride from sources in Western Europe, the
Balkans and Russia. For fiscal year 2004, 1.5 metric tons of
acetic anhydride was seized in or destined for Turkey.

Turkish-based traffickers control and operate heroin
laboratories at various locations. Some of them reportedly
have interests in heroin laboratories operating near the
Iranian-Turkish border in Iran. Turkish-based traffickers
control much of the heroin marketed to Western Europe.

In 2004, Turkish authorities reported an increase in
synthetic drug seizures throughout Turkey. Although Turkish
law enforcement has not seen a large increase in synthetic
drug manufacturing in Turkey, Turkish National Police did
report one synthetic drug laboratory seizure in Usak, Turkey
in December 2004. For fiscal year 2004, a total of 7.7
million dosage units of synthetic drugs, predominantly
Captagon and Ecstasy, were seized in Turkey.

(h) Demand Reduction: While drug abuse remains low in Turkey
compared to other countries, the number of addicts reportedly
is increasing. Although the Turkish Government appears to be
increasingly aware of the need to combat drug abuse, the
agencies responsible for drug awareness and treatment remain
under-funded. As of 2004, six Alcohol and Substance Abuse
Treatment and Education Clinics (AMATEM) have been
established, which serve as regional drug treatment centers.
Due to lack of funds, only one of the centers focuses on drug
prevention as well as treatment. The most recent clinic was
opened in Ankara in 2004 and will serve as the countrywide
coordinating center for drug and alcohol treatment and
education. The Health Ministry has not conducted a drug
abuse survey since 1995 due to lack of resources.

In 2004, the United Nations coordinated a survey in 6 major
cities on drug abuse in Turkey. The survey did not
demonstrate any major increase in the number of drug users
compared to previous data provided by local NGOs.

IV. U.S. Policies, Initiatives and Programs:

(a) U.S. Policy Initiatives and Programs: U.S. policy remains
to strengthen Turkey,s ability to combat narcotics
trafficking, money laundering and financial crimes. Through
fiscal year 1999, the U.S. Government extended USD 500,000
annually in assistance. While that program has now
terminated, during 2004-05 the U.S. Government anticipates
spending approximately $100,000 in previously-allocated funds
on anti-narcotics programs.

(b) Bilateral Cooperation: U.S. counter-narcotics agencies
report excellent cooperation with Turkish officials. Turkish
counter-narcotics forces have developed technically, becoming
increasingly professional, in part based on the training and
equipment they received from the U.S. and other international
law enforcement agencies.

(c) Road Ahead: After the 2002 national elections, many of
the key government officials responsible for
counter-narcotics and money-laundering were replaced;
however, this did not appear to have degraded the quality of
cooperation. The U.S. Mission in Turkey has continued to
engage the appointees, and work with the government.


V. Statistical Tables (through 9 December 2003):

2004 2003 2002

Opium (licit)
- Cultivation 59,300 149,787 117,650
- Eradication N/A N/A N/A
- Harvestable 35,000 99,430 50,741

Drug Seizures
- Cocaine (kg) 123.6 2.6 1.6
- Opium (kg) 72.0 243.6 262.6
- Hashish (tons) 8.6 1.9 10.1
- Heroin (tons) 7.2 5.2 5.1
- Morphine Base (tons) 4.7 0.8 0.8
- Acetic Anhydrite (tons) 1.5 5.8 60.9
- Captagon/other synthetic 7.7 4.95 1.7
(Million dosage units)
- Illicit Labs 1 7 N/A
- Domestic Consumption N/A N/A N/A
- Users who applied
for treatment 8000 N/A N/A
- Users treated 800 N/A N/A
- Arrests 14,117 6,678 8,965

VI. Money Laundering and Financial Crime:

(a) General. In general, though the GOT has tried to bring
its legal regime in compliance with international norms,
Turkey's anti-money laundering regime does not have a strong
reputation for enforcement. In 2001, the GOT signed the
Strasbourg Convention on Laundering, Search, Seizure and
Confiscation of the Proceeds from Crime (ratified September
2003); the Council of Europe (COE) Criminal Law on Corruption
(ratified 2004); and the Council of Europe (COE) Civil Law on
Corruption (ratified April 2003). By becoming a party to
these COE conventions, the GOT obligated itself to revise its
laws to include proceeds of all serious crimes in the
definition of money laundering, and to specify corruption as
a predicate offense for money laundering.

The Turkish Government signed the UN Convention against
Transnational Organized Crime in 2001 and ratified it in
December 2003. Turkey signed the Convention on Combating
Bribery of Foreign Public Officials in International Business
Transactions in 2000 (ratified February 2003). The GOT also
became a party to the 1999 International Convention for the
Suppression of the Financing of Terrorism in 2002.

Turkey cooperates closely with the U.S. and its neighbors in
the Southeast Europe Cooperation Initiative (SECI). Turkey
is responsive, although often not in a timely way, to
requests for US law enforcement assistance necessary to the
investigation of financial crimes related to terrorism,
terrorist financing, and other crimes, pursuant to the
provisions of the Mutual Legal Assistance Treaty (MLAT). All
responses are generated by the Turkish Ministry of Justice.

Turkey is not an offshore financial center but Istanbul is an
important regional financial center, particularly for Central
Asia and the Caucasus, as well as for the Middle East and
Eastern Europe. Since the financial crisis of 2000, the GOT
has significantly tightened oversight of the banking system
through the independent Bank Regulatory and Supervisory
Agency (BRSA). Although it failed to detect massive fraud at
one bank which led to its being taken over in 2003 by
regulators, the BRSA is working to improve its ability to
detect bank fraud. Since the recent banking law amendments
and also the establishment of the BRSA, there has been no
evidence of an increase in financial crimes in Turkey.

Money laundering takes place in both banks and nonbank
financial institutions. Traditional money laundering methods
in Turkey involve the cross-border smuggling of currency;
bank transfers into and out of country; and the purchase of
high value items such as real estate, gold, and luxury
automobiles. It is believed that Turkish-based traffickers
transfer money to pay narcotic suppliers in Pakistan and
Afghanistan, primarily through Istanbul money exchanges. The
exchanges in turn wire transfer the funds through Turkish
banks to accounts in Dubai and other locations in the United
Arab Emirates. The money is then paid, often through the
underground banking system, to narcotics suppliers in
Pakistan and Afghanistan. Local narcotics-trafficking
organizations are reportedly responsible for only a small
portion of the total funds laundered in Turkey. A
substantial percentage of money laundering that takes place
in Turkey appears to involve tax evasion, and informed
observers estimate that as much as 50 percent of the economy
is unregistered. The GOT has taken no steps to regulate or
register alternative remittance networks.

To Post's knowledge, neither the country nor any senior
official, as a matter of government policy or practice,
facilitates or engages in laundering the proceeds from
illegal drug transactions, from other serious crimes or from
terrorist financing. Moreover, to Post's knowledge, Turkey's
financial institutions do not engage in currency transactions
involving international narcotics trafficking proceeds that
include significant amounts of US currency or currency
derived from illegal drug sales in the US or that otherwise
significantly affect the US.
There is no significant black market for smuggled goods in
Turkey. However, since tax evasion is a problem, the GOT is
in the process of reforming its tax administration, with the
goal of improving tax collection. Turkey has established
systems for identifying, tracing, freezing, seizing and
forfeiting narcotics-related assets. Turkey,s laws allow
for only criminal forfeiture.

There are 21 Free Trade Zones operating in Turkey. There is
no indication that theses free trade zones are being used in
trade-based money laundering schemes or by the financiers of
terrorism. The GOT controls access and grants limited
authority within the free trade zones.

There have been no arrests and/or prosecutions for money
laundering or terrorist financing since January 1, 2004.

(b) Laws and Regulations to Prevent Money
Laundering/Terrorist Financing.

Turkey criminalized money laundering in 1996 for a wide range
of predicate offenses, including narcotics-related crimes,
smuggling of arms and antiquities, terrorism, counterfeiting,
and trafficking in human organs and in women. The Council of
Ministers subsequently passed a set of regulations that
mandate the filing of suspicious transaction reports (STRs),
and require customer identification and the maintenance of
bank records for five years. These regulations apply to
banks and a wide range of nonbank financial institutions,
including insurance firms and jewelry dealers. Sanctions
apply for failure to comply. However, the number of STRs
being filed is quite low, even taking into consideration the
fact that the Turkish economy is cash-based. A possible
reason for this is the lack of safe harbor protection for
bankers and other filers of STRs. Turkish officials
indicated in December 2004 that the GOT has drafted
legislation that will provide such protection, but it has not
yet been enacted.

Turkey does not have secrecy laws that prevent disclosure of
client and ownership information by domestic and offshore
financial services companies to bank supervisors and law
enforcement authorities.

Turkey is party to the UN International Convention against
Illicit Traffic in Narcotic Drugs and Psychotropic Substances
and is, in general, a party to all the relevant UN
instruments. However, implementation efforts on UN
anti-financial crime conventions are weak. On terrorism
finance, Turkey does not adhere to all eight of the FATF
special recommendations. The GOT claims, however, that new
legislation being prepared in early 2005 will help bring
Turkey closer to adhering to all relevant international money
laundering and terror finance standards.


Turkey,s police, prosecutors, judges and investigative
agencies require substantial training in financial crimes.
The government has increased its focus on money laundering,
but has had difficulty obtaining convictions. Since being
established in 1997, the Financial Crimes Investigative Board
(MASAK) has pursued more than 500 money-laundering cases.
Through 2004, only one case has resulted in a conviction and
it was overturned. Note: Last year,s report mistakenly
claimed that two cases had resulted in convictions. While
good statistics are not available, most of the cases are
believed to involve non-narcotic criminal actions or tax
evasion.

Money laundering offenses are more broadly defined in the new
Turkish Criminal Law (which will be enforced starting April
2005) to include all predicate offenses punishable by
one-year imprisonment. Previously, Turkey's anti-money
laundering law comprised a list of specific predicate
offenses. In addition, the new Criminal Procedures Law, also
to be enforced in April 2005, facilitates asset forfeiture.
MASAK is trying to strengthen its role as Turkey,s financial
intelligence unit. It would benefit from additional legal
authority; continuity of senior management; training; and
computers. Training and equipment needs are being addressed
by an EU accession twinning project, which is expected to end
in June 2006.

Currently, there are three main pillars which govern MASAK,s
procedures and duties: 1) Regulatory function; 2) Financial
intelligence function; and 3) Investigation and assessment
functions. In a new draft law on its structure and
functions, MASAK will lose its investigative function.
Prosecutors will take on the investigative function and
coordinate the relevant agencies needed for investigations of
financial crimes. MASAK will retain its financial
intelligence and regulatory responsibilities. The new law
also recommends policies to investigate the proceeds of
bribery and corruption. Relevant agencies are currently
reviewing the draft of MASAK,s law and the law is expected
to be passed early in 2005.

(c) Asset Forfeiture and Seizure Legislation. In addition to
penalizing the crime of money laundering, Turkey's anti-money
laundering law calls for forfeiture. However, the law does
not allow for civil as well as criminal forfeiture. Turkish
law does not allow for the administrative freezing of assets.
It relies instead on criminal freezing. Legitimate business
can be seized if used to launder drug money, support
terrorist activity, or are otherwise related to other
criminal proceeds. Property or its value that is confiscated
is transferred to the Treasury. There are no provisions for
sharing, either with domestic or international law
enforcement. The country has not enacted laws for the
sharing of seized narcotics assets, nor for assets from other
serious crimes with other governments. With regards to
terrorism finance, the GOT has the authority to identify and
freeze only the assets of terrorist individuals and groups
designated by the UN 1267 Sanctions Committee.

The anti-money laundering law provides for the confiscation
of all property and assets (including derived income or
returns) which are the proceeds of a money laundering
predicate offense (soon to be expanded to crimes punishable
by one year imprisonment),once the defendant is convicted.
The law allows for the confiscation of the equivalent value
of direct proceeds that could not be seized.
Instrumentalities of money laundering can be confiscated
under the law. In addition to the anti-money laundering law,
Article 36 of the Criminal Code provides for post-conviction
seizure and confiscation of the proceeds of crimes. The
defendant, however, must own the property subject to
forfeiture.

Under the anti-money laundering law, forfeiture provisions
for assets obtained from criminal acts can only be applied to
individuals convicted of laundering "dirty money" and to
those assets in the possession of the convicted subject.

The government enforces existing drug-related asset seizure
and forfeiture laws and MASAK, the Turkish National Police,
and the Courts are the government entities responsible for
tracing, seizing assets and freezing assets. The
jurisdiction has adequate police powers and resources to
trace, seize and freeze assets.

The GOT is engaged in bilateral and multilateral negotiations
with other governments to enhance asset tracing, freezing and
seizure. For example, GOT representatives will participate
in a meeting in Vienna in January 2005 to prepare a draft
model bilateral agreement on the disposal of confiscated
proceeds of crime.

To Post's knowledge, neither traffickers, organized crime
organizations, nor terrorist organizations have taken
retaliatory actions related to money laundering/terrorist
financing investigations, government cooperation with the
USG, or seizure/freezing of assets.

(d) Terrorist Financing. Turkey has not yet explicitly
criminalized the financing of terrorism. It complies with
UNSCR 1373 through the distribution to interested GOT
agencies of ministerial decrees. The tools currently
available under Turkish law for locating, freezing and
confiscating terrorist assets are cumbersome, limited and not
particularly effective. For example, the Turkish authorities
have no legal mechanism to freeze assets of terrorists other
than those linked to Al-Qaeda and the Taliban. The absence
of &safe harbor8 protections from prosecution for bankers
reporting suspicious transactions is another limiting factor.
There is no mechanism for timely information sharing with
other countries, law enforcement and anti-terrorist
financing agencies. As a result, one terrorist financing
investigation conducted by the FBI and Royal Canadian Mounted
Police in 2003 had been hampered. The legislation discussed
above as well as efforts underway in the GOT to define
terrorism finance in the Law to Combat Terrorism in
accordance with the international and EU framework should
improve this situation.

Another vulnerability in Turkey's counter-terror finance
regime is the possibility of abuse in non-profit
organizations. The GOT has a General Director of Foundations
which licenses and oversees charitable organizations.
Applicants are required to verify and prove their funding
sources. Charities must have bylaws and are audited by the
Directorate and are subject to being shut down if they act
outside the bylaws. However, the GOT does not require other
oversight mechanisms such as requiring the publication of
annual financial reports or periodic reporting to competent
authorities to prevent the misuse of non-profit organizations
and alternative remittance systems by terrorist or criminal
groups. There is no central registry to provide ease of
access to appropriate law enforcement and regulatory
agencies. The EU accession twinning project is providing
MASAK with a sound structural database system and could serve
as a registry for information for law enforcement and other
regulatory agencies.
EDELMAN