VZCZCXRO2903
PP RUEHDA
DE RUEHAK #1630/01 0861420
ZNR UUUUU ZZH
P 271420Z MAR 06
FM AMEMBASSY ANKARA
TO RUEHC/SECSTATE WASHDC PRIORITY 4331
INFO RUEATRS/DEPT OF TREASURY WASHDC
RHEHAAA/NSC WASHDC
RUEHIT/AMCONSUL ISTANBUL 0172
RUEHDA/AMCONSUL ADANA 0570
RHMFISS/HQ USEUCOM VAIHINGEN GE
RUEHBS/USEU BRUSSELS
RUEHFR/AMEMBASSY PARIS 5215
RUEHRL/AMEMBASSY BERLIN 4090

UNCLAS SECTION 01 OF 02 ANKARA 001630 
 
SIPDIS 
 
TREASURY FOR OTI - RLEBENSON 
EUCOM FOR BURDICK 
PARIS FOR USOECD 
 
SENSITIVE 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: KTFN EFIN PTER TU
 
SUBJECT: Terrorism Finance: Turkish FIU Still Waiting for 
New Law; Possible Delay in FATF Review 
 
REF: ANKARA 250 AND PREVIOUS 
 
1.(SBU) Summary: The head of Turkey's Financial 
Investigative Unit told us parliamentary consideration of 
the new anti-money laundering law is slowly progressing, and 
the law is not controversial. He expects the Financial 
Action Task Force (FATF) mutual review on-site inspection in 
September but think FATF may push the review itself into 
¶2007. In his public remarks Yarasli links the fight against 
financial crime to maintaining the competitiveness of the 
Turkish economy.  The number of suspicious transaction 
reports filed rose from 290 in 2004 to 352 in 2005.  End 
Summary. 
 
--------- 
MASAK Law 
--------- 
 
¶2. (SBU) Genc Osman Yarasli, president of the anti-money 
laundering agency MASAK, told us the long-awaited "MASAK 
law" is close to moving from a sub-committee of Parliament's 
Plan and Budget Committee to the full committee.  The law 
will reorganize MASAK, explicitly criminalize terrorism 
finance (though other stalled legal reforms are needed to 
internationalize Turkey's definition of terrorism),  provide 
safe harbor for filers of suspicious transaction reports 
(STR's) and increase MASAK's ability to exchange information 
with other international agencies.  According to Yarasli, 
the law is not controversial.  He said one reason for the 
slow pace of parliamentary consideration is that the 
legislation is interdisciplinary, requiring comment from 
multiple government agencies.  The legislation first had to 
be considered by the EU Harmonization Committee before 
moving over to Plan and Budget. The law had been sent to the 
Parliament on June, 9 2005, and the EU harmonization 
Committee cleared the law on December, 29 2005. The Law is 
with the Planning and Budget Commission since January 1, 
¶2006. 
 
¶3. (SBU) Wearily resigned to a long wait, Yarasli explained 
the absence of the new law is holding up other MASAK 
efforts: (preparing for the FATF review by) putting in place 
implementing regulations, and conducting training programs 
for judges, prosecutors, police and financial institutions 
on their respective roles under the new legislative 
framework.  MASAK is gearing up for a series of such 
training programs to be held around the country, including 
more specialized courses for bank compliance officers at 
headquarters (mostly in Istanbul).  Each bank has a 
compliance officer and, under the new law, insurance 
companies, foreign exchange houses and other financial 
intermediaries will also be required to have compliance 
officers. 
 
-------------------------- 
FATF Review May be Delayed 
-------------------------- 
 
¶4. (SBU) Yarasli confirmed press reports that FATF had sent 
Turkey a long questionnaire preparatory to the upcoming 
mutual review.  He said Turkey would respond by June with 
the FATF on-site review team expected to come to Turkey in 
September.  He professed no knowledge of who might be on the 
team.  The review itself, however, might slip into 2007, he 
said, because FATF had concerns about trying to do three 
countries' reviews at the same time. 
 
----------------------- 
Interagency Cooperation 
----------------------- 
 
¶5. (SBU) According to Yarasli, only with the new law would 
MASAK be able to greatly strengthen interagency cooperation 
against terrorism finance.  He said, for example, that MASAK 
lacked authority to receive intelligence information until 
the law is passed.  Nevertheless, he agreed that the 
creation of a terrorism finance unit in the Intelligence 
 
ANKARA 00001630  002 OF 002 
 
 
Division of the Turkish National Police was positive, and 
cited other examples of increased interagency cooperation 
such as bank inspectors checking on bank compliance with 
MASAK regulations. 
 
------------------------------------------- 
MASAK and Turkey's Economic Competitiveness 
------------------------------------------- 
 
¶6. (SBU) Yarasli's vision of MASAK's role was to ensure 
Turkey's economy was competitive by keeping it as free of 
financial crime as possible.  He pointed out that anti-money 
laundering was included in the EU's free movement of capital 
chapter, not under security.  Rather than seeing his role as 
solely law enforcement, he linked the fight against 
financial crime to business confidence and attracting 
foreign investment.  He said illegal activities hamper 
Turkey's competitive advantage. 
 
¶7. (SBU) Yarasli believed that the banking community had 
become more sensitized to the need to keep Turkey's 
financial system free of financial crime. He contrasted the 
banking association's proactive work with MASAK in recent 
months with bankers' attitudes when MASAK was established in 
¶1997.  EU twinning advisor Mario Imparato has told us MASAK 
and the Bankers' Association are cooperating on a common set 
of guidelines for suspicious transaction reports, for 
example. 
 
¶8. (SBU) Yarasli said he expected the number of STR's to 
increase substantially in 2007 after the law is passed (not 
surprisingly, given the lack of safe harbor under current 
law).  MASAK's 2005 report states that STR filings increased 
from 290 in 2004 to 352 in 2005, of which all but three came 
from banks. 
 
--- 
PKK 
--- 
 
¶9. (SBU) When we updated Yarasli on USG efforts to enhance 
cooperation with Turkey and western European countries 
against PKK networks, he said it was a good thing.  On the 
other hand, as he has previously, Yarasli expressed 
skepticism that the Europeans would effectively cooperate 
with Turkey. 
 
MCELDOWNEY