TERRORISM FINANCE: TURKEY FINALLY PASSES LAW ON

UNCLAS ANKARA 005944 SIPDIS SENSITIVE SIPDIS TREASURY FOR OTI - RLOEFFLER AND JSERAFINI E.O. 12958: N/A TAGS: KTFN PTER EFIN ETTC TU SUBJECT: TERRORISM FINANCE: TURKEY FINALLY PASSES LAW ON FINANCIAL INTELLIGENCE UNIT REF: ANKARA 5612 ¶1. (SBU) On October 11, the Turkish Parliament finally passed the "MASAK Law," long-awaited legislation which the Government views as the centerpiece of its efforts to strengthen Turkey's regime against money-laundering and terrorism finance. The law was intended to improve Turkey's compliance with the Financial Action Task Force (FATF) Recommendations. Minister of Finance Unakitan and MASAK President Yarasli had hoped to enact the law before parliament adjourned for the summer, so as to have it in place when FATF's mutual review team was here in September to examine Turkey's AML/CTF regime. In the event, the team's mission to Turkey came prior to passage of the law but the team is still in the process of completing its report. It is not clear how much the subsequent passage will change the FATF team's evaluation. ¶2. (SBU) The legislation restructures MASAK (Turkey's financial intelligence unit, or FIU) along functional lines and broadens the types of entities required to follow know-your-customer rules and file Suspicious Activity Reports (SARs). The most important reform in the legislation is a provision that protects filers of SARs from litigation. Turkey has had a very low number of SARs filed, among other reasons because bank employees feared litigation. ¶3. (SBU) Comment: Other actions are needed to strengthen Turkey's AML/CTF regime so as to comply with FATF recommendations and UNSC resolutions, such as more effective cooperation between government agencies, more technical capacity to investigate financial crimes, creation of a legal basis with which to freeze assets of designated terrorist financiers and broadening the legal definition of terrorism to include international terrorism. Visit Ankara's Classified Web Site at http://www.state.sgov.gov/p/eur/ankara/ WILSON