In 2019, the Financial Action Task Force (FATF), an international body that sets global standards for countering money laundering and terrorist financing, placed Turkey on its “gray list” of countries that are not doing enough to combat these threats. This was a significant downgrade for Turkey, which had been on the FATF’s “white list” of countries with effective anti-money laundering and terrorist financing regimes since 2013.

There are a number of reasons why the FATF may have placed Turkey on the gray list. 

One is that Turkey has not yet implemented the FATF’s recommendations on improving its anti-money laundering and terrorist financing regime. In particular, the FATF has called on Turkey to improve its financial intelligence unit, increase its cooperation with other countries on money laundering and terrorist financing investigations, and take steps to prevent the financing of terrorism.

Another reason for Turkey’s downgrade may be its failure to adequately address the risk of money laundering and terrorist financing associated with its large and growing informal economy. According to some estimates, the informal economy accounts for as much as 60 percent of Turkey’s GDP. This creates significant opportunities for money launderers and terrorist financiers to operate without detection.

The FATF’s decision to place Turkey on the gray list is likely to have negative repercussions for the country’s economy. For one thing, it will make it more difficult for Turkish banks to do business with international banks and financial institutions. This could lead to a decline in foreign investment in Turkey, as well as a reduction in the flow of capital into the country.

In addition, the FATF’s decision is likely to damage Turkey’s reputation as a safe and stable place to do business. This could lead to a decline in tourism, which is already suffering due to the country’s poor human rights record and the negative publicity surrounding its military offensive in Syria.

It is still too early to say definitively why the FATF placed Turkey on the gray list. However, the move is likely to have negative consequences for the country’s economy and its reputation as a safe and stable place to do business.