FATF Explains Removal of Turkey from Grey List, Remains Silent on Russia Blacklisting

The Financial Action Task Force (FATF) has clarified its reasons for removing Turkey from its grey list, though it did not provide details regarding its decision not to blacklist Russia. Previously, it was revealed that Turkey was likely to come off the grey list following an on-site FATF inspection.

Turkey was downgraded to the grey list in 2021 due to concerns about its measures to prevent money laundering and terrorist financing. Greylisted countries are identified by FATF as needing significant improvement in anti-money laundering (AML) controls and often face reduced international investment as a result of this classification.

Announcing the reclassification, FATF stated that Turkey has made "significant progress" in addressing its concerns. When asked to outline the areas of improvement, FATF president T Raja Kumar said, "Turkey has been taken off the grey list because of the substantial progress it has made."

"A FATF team visited Turkey in May and they confirmed Turkey has taken substantive steps to improve its AML and CTF (Counter-Terrorism Financing) regime and address all actioned items on its action plan. Let me just cite some examples. By conducting complex money laundering prosecutions. Pursuing terrorist financing investigations and implementing a risk-based approach to supervision."

Although several analysts have pointed out that Turkey-based entities are helping to fund Russia's war in Ukraine, Kumar noted that Turkey has demonstrated AML improvements and the "political will to uphold these changes."

Meanwhile, the outgoing president addressed the topic of blacklisting Russia, as demanded by the Ukraine delegation. Following its invasion of Ukraine in February 2022, Russia was suspended from FATF in 2023. Earlier this week, the Ukrainian government formally called on FATF to blacklist Russia due to the country’s increasingly close ties to North Korea.

FATF reiterated that Russia remains suspended but not blacklisted, a step Ukraine argues is necessary to further isolate the country and hinder its war effort. When asked why Russia was not blacklisted, Kumar explained, "This plenary decided to continue the suspension of the Russian Federation’s membership. I can’t over-emphasise how this is an unprecedented decision, the first time that FATF has suspended any member. Russia no longer plays a leadership role, nor does it attend FATF meetings."

By fLEXI tEAM