Treasury and Finance Minister Mehmet Şimşek late Tuesday said Türkiye is preparing new legislation covering crypto assets to persuade an international crime watchdog to remove it from its so-called "grey" monitoring list.
The Financial Action Task Force (FATF) downgraded Türkiye to the grey list in 2021. Addressing a parliamentary commission late on Tuesday, Şimşek said the latest FATF report found Türkiye fully compliant with all but one of the watchdog's 40 standards.
"The only remaining issue within the scope of technical compliance is the work related to crypto assets," Şimşek said.
The grey list includes countries the FATF suggests have taken insufficient action to prevent money laundering and terrorist financing.
"We will submit a law proposal on crypto-assets to the Parliament as soon as possible. After that, there will be no reason for Türkiye to stay on the grey list, if there are no other political considerations," Şimşek noted.
He gave no further details of the planned legal changes.
The FATF, set up by the G-7 group of advanced economies to protect the global financial system, had warned Türkiye in 2019 about "serious shortcomings," including the need to improve measures to freeze assets linked to terrorism and weapons of mass destruction proliferation.
Türkiye has harshly criticized the watchdog, citing its compliance efforts show a resolute high-level political commitment against money laundering and the financing of terrorism.
Inflation-adjusted accounting
Meanwhile, Şimşek also said that Türkiye would move to inflation-adjusted accounting, but financial institutions may be excluded from the practice.
Turkish companies' end-2023 balance sheets will be inflation-adjusted, with the practice expected to continue until 2026 due to current inflation forecasts, the Treasury told Reuters last week. A change analysts said this would affect the country's banks the most.
"We will move to inflation accounting. Maybe there'll be an exception for financial institutions, and we'll not include them in the practice. But apart from that, we will move into that practice," Şimşek said.
The Treasury's revenue administration published a draft regulation this month detailing a move to inflation accounting.
Türkiye's annual consumer price inflation climbed to 61.53% in the 12 months since September, according to the most recently available data.
In the last two years, companies have sought to protect themselves from high inflation by purchasing fixed assets rather than leaving money in bank accounts. Those that have turned to non-monetary fixed assets are expected to receive higher profits and pay correspondingly higher taxes in 2024.
Turkish banks, which saw their average profit increases slow to around 50% in the first half of this year following a 366% surge in 2022, would be among those affected most negatively by the move to inflation-adjusted accounting, analysts said.
"Banks will report perhaps a quarter of the profits they used to report," Soner Gökten, assistant professor for accounting and finance at Başkent University, said last week.