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Efforts to Exit the Gray List

Turkey's issues are undoubtedly much more intricate, deeply ingrained, and structural. While the endeavors to exit the Gray List represent positive and well-intentioned steps, Turkey should concentrate on ensuring legal security and developing a rational fiscal framework with a much stronger determination.
Efforts to Exit the Gray List

The Freedom Observer

The Freedom Observer

We monitor the ongoings of Turkiye in the fields of the rule of law, economics, civil society, and politics.

As highlighted in earlier editions of the Freedom Agenda, Turkey has been facing challenges in attracting foreign investment for a considerable period. Turkey's inclusion in the gray list category by the Financial Action Task Force (FATF) is a key factor contributing to this issue, necessitating more stringent monitoring. The gray list is a global compilation of countries lacking sufficient measures against money laundering and terrorism financing, exhibiting deficiencies in these areas. In 2021, Turkey was added to this list due to a decision by the FATF. Faced with the associated risks, foreign investors have hesitated to engage in long-term investments in Turkey or have deferred their investment plans. However, it is worth noting that there have been some positive developments and initiatives to attract foreign investors since Mehmet Şimşek assumed office.

First and foremost, Finance Minister Şimşek demonstrates a heightened awareness compared to some of his predecessors regarding the crucial significance of foreign investment for the Turkish economy and the requisite policies to attract such investment. The principal issue, in this case, lay in President Erdoğan's decisions, which were not grounded in rational considerations. For a considerable duration, Erdoğan distanced himself from foreign investors and shaped Turkey's foreign policy to exacerbate this divergence. Consequently, when Mr. Şimşek assumed his role, many analysts expressed concerns that his autonomy might be restricted and his tenure in the ministry might be short-lived. However, Finance Minister Mehmet Şimşek and Central Bank Governor Hafize Gaye Erkan have exerted considerable efforts to revive Turkey's capacity to attract foreign investors. Indeed, Interior Minister Ali Yerlikaya's unwavering policy in the fight against gangs and criminal organizations, along with a partial shift in foreign policy, can also be interpreted within this context.

As stated earlier in this section, Turkey has initiated a comprehensive mobilization to exit the Gray List. For Turkey, which found itself on the Gray List due to shortcomings in fulfilling its responsibilities within the legal framework established by the FATF, it would have been considerably more straightforward to avoid being placed in this category altogether than to navigate the process of exiting it. The essential task was promptly addressing specific areas flagged by the FATF as critical. One of the crucial issues in this regard was the regulation to monitor the money laundering activities of Politically Exposed Persons (PEP). By the conclusion of 2022, a communiqué published in the Official Gazette successfully addressed the concerns related to PEP.[6]  Only one of the 40 topics recommended by the FATF for regulation still needs to be submitted. If this recommendation is implemented, nearly all the issues between the FATF and Turkey will be effectively resolved. On the flip side, the latest monitoring report from the FATF regarding Turkey stated, "The FATF notes that Turkey continues to progress on its action plan; however, all deadlines have now expired. The FATF encourages Turkey to continue to implement its action plan as soon as possible to address the strategic deficiency noted above."7

All these positive developments should not be construed to mean that Turkey has resolved its economic problems. Turkey's issues are undoubtedly much more intricate, deeply ingrained, and structural. While the endeavors to exit the Gray List represent positive and well-intentioned steps, Turkey should concentrate on ensuring legal security and developing a rational fiscal framework with a much stronger determination.




1 Şerafettin Can Atalay (2) [GK], B. No: 2023/53898, 25/10/2023.

2 Kadri Enis Berberoğlu (2) [GK], B. No: 2018/30030, 17/9/2020.

3Ömer Faruk Gergerlioğlu[GK], B. No: 2019/10634, 1/7/2021.

4 Leyla Güven [GK], B. No: 2018/26689, 7/4/2022

5 Şerafettin Can Atalay (2) [GK], B. No: 2023/53898, 25/10/2023, para.117.

6 https://www.resmigazete.gov.tr/eskiler/2022/11/20221117-2.htm

7 İngilizce metin: The FATF notes Türkiye continued progress across its action plan; however, all deadlines have now expired. The FATF encourages Türkiye to continue to implement its action plan to address the above-mentioned strategic deficiency as soon as possible.

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The Freedom Observer

The Freedom Observer

We monitor the ongoings of Turkiye in the fields of the rule of law, economics, civil society, and politics.

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Turkey

Mehmet Şimşek

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The Freedom Observer

We monitor the ongoings of Turkiye in the fields of the rule of law, economics, civil society, and politics.

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