Turkish President Rajab Tayyip Erdogan
The Financial Action Task Force (FATF), an international organization that monitors and sets guidelines to protect against money laundering and the financing of terrorism, added Turkey, Jordan and Mali to its watch list on Thursday.
The “grey list” of the Paris-based Financial Action Task Force calls for increased scrutiny of financial transactions in three countries that have agreed to act on the group’s recommendations. Adding to the list can scare investors and creditors, hurting exports, production and consumption. It can also caution global banks from doing business with a country.
The FATF also announced a new strategy to combat corruption through shell companies or other unnamed entities. The group said the proposed rules would force countries to set up a registry listing who actually owns a company that must be verified and updated within a month.
“The proposals will close the loopholes and regulatory vulnerabilities that have long allowed counterfeit companies to be used as cover for criminal activity or to hide funds from tax authorities,” said FATF President Marcus Pleier.
The proposed rules follow a recent release of the “Pandora Papers” by the International Union of Investigative Journalists. The report sheds light on the financial dealings of elite and corrupt people and how they have used offshore accounts and tax havens to protect trillions of dollars in wealth.
The FATF is expected to adopt the rules at a meeting in February, which is made up of 37 member states, including the United States and two regional groupings, the Gulf Cooperation Council and the European Commission.
Turkey, Jordan and Mali were added to the watch list and Botswana and Mauritius were removed, 23 countries considered to be only partially meeting international regulations to fight terrorism financing and money laundering.
The listing comes as a new blow to Turkey, which is already in the midst of an economic crisis. Its currency lira fell to a record low against the US dollar on Thursday after a sharp cut in interest rates.
North Korea and Iran are the only two countries on the FATF high-risk blacklist. That designation means that international financial transactions with those countries are closely scrutinized, making doing business with them expensive and complicated. International creditors can also restrict lending to black-listed countries.
Read more: Pakistan will remain on the ‘Grey List’ till the next FATF meeting in April 2022
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