TURKEY: CAPITAL REPATRIATION LAW WILL NOT EXEMPT

UNCLAS ANKARA 001907 SENSITIVE SIPDIS E.O. 12958: N/A TAGS: KTFN EFIN TU SUBJECT: TURKEY: CAPITAL REPATRIATION LAW WILL NOT EXEMPT MONEY FROM AML-CTF REVIEW REF: A. ANKARA 1898 ¶B. ANKARA 1872 ¶C. ANKARA 1864 ¶1. (U) Sensitive but unclassified. Not for internet distribution. ¶2. (SBU) Summary: We met October 31 with Hasan Aktan, Undersecretary of Finance, to discuss the GOT's draft Capital Repatriation law and press reports that the GOT draft bill would exempt repatriated capital from money laundering and terrorism finance laws. Aktan said the bill, which is now in the Parliament, only exempts Turkish citizens who bring capital from abroad into Turkey from tax evasion or export invoice fraud charges. The money will have to be deposited in a bank and depositors will have to to certify the source of the funds. MASAK (the Turkish FIU) will receive reports of all repatriated funds and will review the transactions for AML-CTF concerns. End summary. ¶3. (SBU) Aktan said that the GOT modeled its Capital Repatriation law on similar legislation from Italy, Germany, Greece and Ireland. The legislation is now in the Parliament's Planning and Budget Committee. The aim of the law is to attract much-needed capital to Turkey by reducing barriers for Turks to bring back money they currently hold offshore. A major barrier to this, the GOT believes, is concerns about unpaid taxes and/or fraudulent export invoice declarations used to keep or move funds offshore. Accordingly, the bill provides an amnesty during a three-month period for Turkish citizens who bring or transfer funds into Turkey and deposit the money in a bank. ¶4. (SBU) Aktan said the GOT remains sensitive to money laundering and especially to money coming into Turkey to fund the PKK. Accordingly, the law requires Turks who repatriate money to deposit it in a bank, present identity documents and certify the origin of the money. Reports of the deposits, including depositor declarations, will be given to MASAK, the Turkish financial intelligence unit, to review for money laundering or terrorism finance concerns. ¶5. (SBU) Comment: As reported reftels, Turkey is facing a potentially serious foreign exchange liquidity crisis, and this law is intended to alleviate this in part by giving Turks a chance to repatriate some of their offshore money. The tax and export invoice fraud amnesty may be attractive for some, but the GOT is undercutting this by refusing to raise its bank deposit guarantee limit from the current YTL 50,000 or USD $33,000. Much of the money the GOT hopes to attract is now in European banks, where it is protected by much higher or unlimited deposit guarantee limits. In recognition of this, the Planning and Budget Committee added a provision to the GOT's draft bill, giving the GOT the discretionary authority to raise deposit insurance rates in the future. End comment. Visit Ankara's Classified Web Site at http://www.intelink.sgov.gov/wiki/Portal:Turk ey WILSON