Türkiye Exits FATF Grey List: Economic Implications
Türkiye's removal from the grey list marks a significant step in its economic strategy. Explore how the move might influence international investments and economic policies.
Published June 29, 2024 - 00:06am

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Türkiye has achieved a significant milestone by being removed from the grey list of the Financial Action Task Force (FATF), an international watchdog for financial crimes. This comes after three years of rigorous efforts by Turkish authorities to meet FATF's stringent criteria for combating money laundering and terrorist financing. It signals a positive shift in Türkiye's financial standing on the global stage and is expected to have far-reaching implications for its economic landscape.
The Financial Action Task Force (FATF) announced Türkiye's exit from the grey list during its plenary meeting in Singapore. The Turkish Treasury and Finance Ministry welcomed the news, attributing the achievement to decisive steps and strategic measures taken over the past few years. Treasury and Finance Minister Mehmet Simsek expressed his satisfaction on social media, stating We made it.
The ministry emphasized its commitment to continuing the fight against financial crimes with renewed determination. This includes bolstering the administrative and technical capacity of Türkiye's Financial Crimes Investigation Board (MASAK) and implementing legal and administrative regulations with enhanced sensitivity. These measures have been lauded for aligning Türkiye with international financial standards and fortifying its position in the global financial system.
The delisting is expected to bolster confidence in the Turkish economy, creating a more favorable environment for international investments. It reassures global investors and financial institutions about Türkiye's commitment to financial transparency and integrity. Previously, being on the FATF grey list had made it difficult for Türkiye to attract short-term capital inflows and foreign direct investment, as highlighted in a 2021 report by the International Monetary Fund (IMF). With this change, Türkiye's financial assets, including the lira, are likely to see a boost in international confidence.
However, experts remain cautious about the immediate economic impact of Türkiye's removal from the list. Political stability, the rule of law, and orthodox economic policies are seen as critical factors in attracting sustained foreign investments. Wolfango Piccoli, co-president of London-based consultancy Teneo Intelligence, remarked that while the FATF's delisting adds credibility to Türkiye's economic turnaround, it may not immediately drive significant foreign capital inflow. He also pointed out ongoing concerns regarding Türkiye's role in facilitating financial activities related to Hamas.
As part of its broader strategy, Türkiye has enacted legislation governing cryptocurrencies to align with international standards and prevent their misuse for illicit activities. This initiative is expected to strengthen Türkiye's financial infrastructure and appease international watchdogs. Additionally, the government has implemented measures to monitor social media influencers for signs of financial wrongdoing, underlining its commitment to comprehensive financial oversight.
Türkiye's proactive steps in combating organized crime have been notable. Led by Finance Minister Simsek and Interior Minister Ali Yerlikaya, efforts have resulted in the apprehension of over 3,000 suspects and the confiscation of properties worth $3.2 billion in various operations. These actions reflect the government's dedication to eliminating illegal financial activities within its borders.
On the economic front, President Recep Tayyip Erdogan has maintained his stance against high-interest rates. He believes lower rates will help curb inflation, a view that shapes the ongoing economic policy discussions. The Central Bank of Türkiye, supported by a record-high net reserve of $146 billion, has kept its benchmark interest rate at 50 percent for several months, with potential rate cuts expected in the near future.
Fitch Ratings has already revised its growth forecast for Türkiye's economy upward to 3.5 percent for 2024, indicating cautious optimism about the nation's economic outlook. Yet, substantial progress is necessary for Türkiye to attain more favorable credit ratings and achieve investment-grade status, as noted by economist Prof. Cem Cakmakli of Koc University. He emphasizes the need for rational economic policies and coherent strategies to sustain this positive momentum.
The removal from the FATF grey list is a crucial step for Türkiye, but it is one part of a more extensive effort needed to secure a robust economic future. The next few years will be pivotal as Türkiye aims to strengthen its economic policies, ensure financial stability, and attract significant international investments.