The Financial Action Task Force, the Paris-based body that monitors countries' susceptibility to money laundering and terrorism financing, removed Turkey Friday from its gray list of countries it's watching for illicit activities.
Turkey was added to the gray list in 2021 amid concerns of money laundering and terror financing after the FATF met with Turkish officials to assess progress in addressing those concerns.
“With this development, international investors’ confidence in our country’s financial system has become even stronger,” Turkish Vice President Cevdet Yilmaz said on the social media platform X.
“The decision will have extremely positive consequences for both our financial sector and our real sector,” he said.
He added that the exit from the gray list will accelerate international resource inflows and make Turkey’s borrowing costs more attractive.
“The increase in interest in Turkish lira assets due to the acceleration of capital flows to our country will also accelerate the disinflation process,” he added.
Inflation in Turkey has been at sky-high levels, with year-on-year inflation hitting 75.45% last month. Turkey’s central bank decided on Thursday to keep interest rates steady at 50% despite soaring inflation. Inflation is expected to fall to around 42% by year end as the government continues working on the country’s economic turnaround.
Turkey’s removal from the gray list comes a day after Reuters reported that Turkish Finance Minister Mehmet Simsek will be speaking at the FATF meeting in Singapore. In the two-day visit, Simsek will also hold talks with Singapore’s prime minister as well as investors.
Following the meeting, the watchdog said that Turkey had made “significant progress” in improving its anti-money laundering procedures and combating terrorism financing.
Turkey's business world also hailed the decision. Rifat Hisarciklioglu, the head of Turkish Union of Chambers and Commodity Exchanges described the removal as a "positive" development.
"It confirms that the Turkish economy is progressing in the right direction," he wrote on X.
The move, which was widely expected, had little impact on the market and the value of the lira, which lowered slightly to 32.8845 against the dollar.
Tim Ash, a strategist at Bluebay Asset Management, said, “The good news around Turkey and the reforms from Simsek just keep on coming.”
Countries on the FATF's gray list are closely monitored and have to work with the watchdog to correct vulnerabilities to money laundering and terrorism financing. In February, the body removed the United Arab Emirates from the list.
