Prospects brighten as Turkey taken off money laundering 'grey list'

The decision follows a recent FATF meeting with Turkish authorities, during which the organisation decided the country was taking satisfactory steps to reduce money laundering and not being stringent enough over financing for terrorism organisations. 

The FATF's announcement means a potential boost in investor and consumer confidence in Turkey again which should help bolster the country's economic and financial systems and provide a way out of the serious economic decline it has been in for some time. 

The financial crisis is mainly due to soaring inflation, left unchecked for months because of Turkey's unconventional monetary policies backed by President Recep Tayyip Erdogan, who had previously gone on record to say that he believed that higher interest rates caused inflation. 

When the strategy failed, Turkey did a sharp reversal under the then central bank governor Hafize Gaye Erkan, raising interest rates significantly. That in turn led to businesses and households suffering because of the increased debt burdens. Turkey’s housing market also soared simultaneously, with rents and mortgages quickly becoming unaffordable for many. 

However, now that the country is officially off the grey list, more foreign businesses, investors and global banks are expected to return, with output, exports and consumption also likely to bounce back. 

Turkey's Interior Minister Ali Yerlikaya said on social media platform X, as reported by Associated Press:  "We will with determination continue our fight against organised crime organisations, the traffickers of poison (drugs), the immigrant smuggling rings, the money-laundering criminal groups, and especially, against the financing of terrorism and of those traitors."

FATF, the international money laundering watchdog, had put Turkey on the grey list back in 2021, following increased concerns that the country was playing a large role in terrorist financing and money laundering. 

That was mainly because of the country's lack of regulatory oversight in terms of property, banking and other sectors, with regard to terrorism financing and money laundering for groups such as al Qaeda and the Islamic State. 

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