Turkey's financial crimes watchdog issues new cryptocurrency trade regulations

Following the recent explosive developments in the Turkish cryptocurrency market, a guide has been prepared and released by the Financial Crimes Investigation Board (MASAK) to regulate trade. However, experts say it is not enough.

Tuesday May 11 2021 03:10 pm

K. Murat Yıldız / Duvar English

The Financial Crimes Investigation Board (MASAK) has released a guide for crypto service providers.

With the publication of the Regulation on the Prevention of Laundering Proceeds of Crime and the Financing of Terrorism in the Official Gazette, crypto-asset service providers were added to the list of MASAK's obliged parties.

A fine of up to 4 million liras can be imposed on service providers who fail to meet their obligations, according to the guide.

Crypto-asset service providers are now required to identify their customers, report suspicious transactions, provide information and documents, and preserve and submit data to authorities. When the transaction amount or the total amount of interconnected transactions is 75 thousand liras or more, crypto-asset service providers will be required to identify the customer and transaction to the authorities if there is doubt about the adequacy and accuracy of customer identification information.

Moreover, before establishing a business relationship or processing a transaction, an identification process will be mandatory.

Maximum of 10 days to report ‘suspicious transactions’

The legal representatives of the obligated party will fulfill the "suspicious transaction reporting obligation." These individuals will evaluate the information and findings obtained via research, to the extent of their authority and capabilities, and report any suspicious transactions to MASAK. The legal representative of the crypto-asset service provider will prepare the "Suspicious Transaction Reporting Commitment Form in Electronic Environment" and submit it to MASAK with an original signature. Suspicious transactions will be reported within 10 business days of noting suspicion, at the latest, and in urgent cases should be reported immediately.

If the obligations are violated, MASAK will impose an administrative fine per transaction to the amount specified in the relevant law. If obliged parties, which are issued a higher fine, violate the same obligation the following year, these fines will be doubled.

A single violation of the obligation to identify the customer and provide continuous information will result in a fine of 30,000 liras, and a violation of the obligation to report suspicious transactions will result in a fine of 50,000 liras. A prison sentence of one to three years and a judicial fine of up to 5,000 days may be imposed in the event of a violation of the obligations to provide information and documents, preservation, and submission, according to the relevant law.

New taxes and regulations on the table

Sources in Ankara told Duvar English that new taxes will be levied on cryptocurrencies and additional regulations will be put in place in the near future. Thus, it is now obvious that the long unregulated domestic crypto market in Turkey has come to an end, not only for platforms, but also for investors.

While agreeing with the general opinion that the state was late to implement regulations, Thodex victims’ lawyer, an expert on capital market and finance law, Oğuz Evren Kılıç told Duvar English, “Regulations on these issues are being made around the world. Our state has responded by enacting new regulations as well.”

“The importance of the crypto market and the gravity of the situation have only recently become apparent to the rest of the world. As a result, all states are behind in enacting these regulations, not only Turkey,” Kılıç added.

Comprehensive legal regulation is needed in Turkey according to Kılıç. “This arrangement is not enough. The Capital Markets Board of Turkey (SPK) has to take steps. First, you need a ‘main law.’ For example, a digital entity law or a crypto entity law. After such a law exists, all rules and regulations must be aligned with the law. A regulation alone won’t solve the problem at hand, it will make it even bigger,” he concluded.