VZCZCXRO0873
RR RUEHDA
DE RUEHAK #3325/01 1581312
ZNR UUUUU ZZH
R 071312Z JUN 06
FM AMEMBASSY ANKARA
TO RUEHC/SECSTATE WASHDC 6338
INFO RUEHIT/AMCONSUL ISTANBUL 0741
RUEHDA/AMCONSUL ADANA 0839
RUEATRS/DEPT OF TREASURY WASHDC
RUEAWJA/DEPT OF JUSTICE WASHDC

UNCLAS SECTION 01 OF 02 ANKARA 003325 
 
SIPDIS 
 
TREASURY FOR LEBENSON 
JUSTICE FOR OPDAT 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: EFIN PTER KTFN TU
SUBJECT: FINANCIAL MONITORING OF TURKEY'S CHARITIES 
 
 
¶1. (SBU) SUMMARY: There are two types of private 
charitable organizations that are subject to different 
rules and official oversight.  Charitable "foundations" 
have played a prominent role in Turkish society dating 
back to the Ottoman period, and non-profit 
"associations" have become increasingly important under 
the Turkish Republic.  While both types of 
organizations are regulated, the government 
increasingly relies on the groups to self-monitor, 
raising concerns about potential misuse of these 
organizations to facilitate terrorist or criminal 
finance.  Although the Director of Foundations doubted 
criminals would elect to make use of a regulated 
foundation, a Ministry of Interior official hinted that 
the regulatory system for associations is not strong 
enough to prevent potential abuse by money launderers 
or terrorist financiers. End summary. 
 
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ESTABLISHING AND MONITORING FOUNDATIONS 
--------------------------------------- 
 
¶2. (SBU) The General Directorate of Foundations (VGM) 
falls under the Prime Ministry's umbrella, and 
regulates and oversees all charitable foundations, many 
of which began their existence as religious trusts 
(waqfs) under the Ottoman Empire.  According to General 
Director of Foundations (VGM) Yusuf Beyazit, there are 
approximately 41,550 foundations registered in Turkey 
as of April 2006.  Beyazit noted that the "foundation" 
concept is very important in Turkish culture, dating 
back to the Ottoman period. 
 
¶3. (SBU) Beyazit told us that every foundation submits 
its balance sheet and activity report to VGM, which 
reviews the records to monitor how the organization 
spent its money.  He said that all funding from abroad 
must come through the banking system, and that 
foundations must have Ministry of Interior (MoI) 
permission to send money to or receive money from 
foreign entities.  Beyazit explained that VGM 
communicates with MASAK (Turkey's financial 
intelligence unit) or the MoI if the need arises, but 
that it does not happen often because of "how heavily 
regulated the system is."  Beyazit was skeptical that 
terrorism financiers would use Turkish foundations 
given the extent of state oversight. 
 
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ASSOCIATIONS ADMITTEDLY LOOSE ON REGULATION 
------------------------------------------- 
 
¶4. (SBU) Unlike foundations, non-profit associations 
(dernekler) fall under the Ministry of Interior's 
umbrella.  According to Senturk Uzun, director of the 
MoI's associations department, there are approximately 
80,000 registered associations in Turkey, with nearly 
250 new associations formed every month.  Uzun 
explained that because of changes in the Associations 
Law in 2004, it is now procedurally and financially 
easier to establish an association.  To become an 
association, an interested group of at least seven 
people must apply to the MoI.  After six months, the 
group must increase to over 17 members.  If it does 
not, the association charter is revoked. 
 
¶5. (SBU) Uzun told us that every association must 
submit an annual report to the MoI, which reviews how 
much each association has spent, how many employees it 
has, and even how many computers it has.  The MoI 
compares associations' annual reports across the years 
and if it notes unusual differences, it dispatches MoI 
auditors to investigate.  Uzun said that all donations 
from abroad should come through the Central Bank - at 
the MoI's request, the Central Bank semi-annually gives 
the MoI a report of donations from foreign entities. 
He also noted that in the past associations had to have 
permission to receive money from abroad, now they 
simply have to declare the receipt after they receive 
it. 
 
¶6. (SBU) Uzun admitted that the MoI's monitoring of 
associations is not very strong.  His office was 
created only three years ago, before which security 
forces regulated associations, often keeping them under 
pressure by stationing police outside.  Now the MoI 
 
ANKARA 00003325  002 OF 002 
 
 
relies on the associations themselves to declare their 
wealth, and the MoI relies on its own ability to catch 
it if they do not report accurately.  Uzun said that 
they tend to only investigate large associations 
receiving substantial donations from single 
individuals. 
 
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MASAK WEIGHS IN 
--------------- 
 
¶7. (SBU) On the other hand, Ismail Caliskan, Head of 
the State Security Department of the Turkish National 
Police, told us that his department monitors all non- 
governmental associations for terrorist connections. 
However, the police are not financial sleuths, and they 
monitor the association's members, rather than their 
banking records, for links to terrorist organizations. 
 
¶8. (SBU) Uzun noted that the MoI Associations 
Department recently received a letter from MASAK, 
asking the department to be vigilant to potential 
criminal exploitation of associations.  The MASAK 
letter offered the unit's services in investigating 
suspicious financial activities.  (Comment: We believe 
this letter may have been elicited by a note that we 
sent to MASAK, alerting them to an op-ed by EB A/S Tony 
Wayne published in a Turkish newspaper on this very 
subject.  End comment.) 
 
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COMMENT 
------- 
 
¶9. (SBU) Uzun's candor in speaking about potential 
loopholes and weaknesses in the MoI's regulation of 
associations was unusual and may indicate weak 
financial regulation of charitable organizations, much 
as financial investigation tends to be a weak area in 
Turkish law enforcement.  On the other hand, Turkey's 
bias towards state control and monitoring may be 
deterrents to criminal abuse of associations and 
foundations.  Turkey's amending its laws in compliance 
with more liberal EU regulations also makes controlling 
foundations' and associations' inflows and spending 
more difficult.  Nonetheless, these new laws are not 
applying anti-money laundering standards, such as "know 
your customer" rules, to these organizations. 
 
WILSON