Türkiye clears FATF review but is put on watch over a 7,000-case backlog

Türkiye scored passing grades on most of the Financial Action Task Force’s (FATF) anti-money-laundering standards, per the Wednesday release by the financial regulator, building on the jurisdiction’s progress since it exited the FATF gray list in June 2024.

However, the country is not yet in the clear as it only got upgraded for enhanced follow-up because of an extensive backlog of unprosecuted financial crime cases, which the FATF said it must close within three years.

How did Türkiye perform in the FATF review?

Türkiye was graded as compliant or largely compliant on 38 of the 40 recommendations in the FATF’s fifth-round mutual evaluation. The country received partially compliant ratings for the remaining recommendations, according to the report and Türkiye’s Treasury and Finance Ministry.

Türkiye did not perform as well on the harder assessment of the effectiveness of its rules, earning three substantial and eight moderate ratings across 11 testing areas.

The enhanced follow-up designation that Türkiye got is not a blacklist; it is a reporting requirement to update the FATF more frequently on how the country is closing the gaps flagged in the report.

Türkiye was placed in the same category after its previous evaluation in 2019.

The Treasury and Finance Ministry, in a statement on the same day, ruled out any return to the gray list, pointing to how the FATF assessment confirms that Türkiye does not have any critical deficiencies in tackling money laundering, terrorist financing or the financing of weapons of mass destruction.

What does the FATF want Türkiye to do?

The FATF said not enough cases reach a courtroom verdict even though Türkiye has gotten better at some problem areas, including using financial intelligence and cooperating with foreign counterparts.

The regulator highlighted the effectiveness problem, writing: “Challenges in fully translating investigations into judicial outcomes have resulted in a backlog of more than 7000 cases pending prosecution.”

The report also called out a structural issue with Turkish law. In many cases, authorities can only issue administrative sanctions against companies because they cannot apply criminal liability to legal persons. That system, the FATF believes, is insufficient for a country with Türkiye’s risk profile.

Money-laundering cases in Turkish courts reached 12,629 at the end of 2025, according to the BirGün news outlet, with 17,969 defendants and 28,477 underlying offenses awaiting judgment.

A three-year roadmap, with crypto in scope

FATF handed Ankara a set of Key Recommended Actions to complete within three years. They include sharpening its grasp of terrorist-financing risks, pushing harder on money-laundering cases tied to high-risk predicate offenses such as drug trafficking, smuggling and illegal betting, lifting the rate of convictions, and tracing and recovering criminal assets moved abroad.

Countries that miss the three-year mark face escalation, up to a high-level mission to gauge the government’s political will.

Virtual asset service providers sit inside the picture. FATF noted that a regulatory framework for VASPs was still being rolled out during the on-site visit in November 2025, and that supervisors had ramped up risk-based compliance checks on financial institutions and crypto platforms, with extra attention on higher-risk entities.

It found that firms generally understand their money-laundering exposure and obligations, while their handling of terrorist-financing risk and suspicious-transaction reporting still lags outside the banking sector.

Where the pressure lands next

Ankara says the follow-up work will run through national strategies on money laundering, terrorist financing and asset confiscation for 2026-2030, plus a proliferation-financing plan for 2025-2029. Whether those translate into more prosecutions and recovered assets is the exact question FATF has told Türkiye to answer on a clock.

The scrutiny lands against a backdrop of long-standing outside criticism of Türkiye’s exposure to illicit flows. Analysts at Nordic Monitor argued earlier this year that a proposed 20-year tax exemption on foreign-sourced income for new residents, a plan floated by President Recep Tayyip Erdoğan, could widen laundering channels absent tougher source-of-funds checks.