The global financial misconduct watchdog Financial Action Task Force (FATF) on Friday announced Türkiye's removal from a so-called "gray list" of countries that require special scrutiny, in a long-awaited decision that officials say will help accelerate foreign inflows.
"We succeeded," Treasury and Finance Minister Mehmet Şimşek wrote ahead of the announcement in a comment on social media platform X, followed by an emoji of the Turkish flag. Şimşek was in Singapore to attend FATF's plenary meeting.
Officials have repeatedly affirmed that Türkiye has completed necessary studies and should be delisted from the list, which includes countries the watchdog suggests have taken insufficient action to prevent money laundering and terrorist financing.
Türkiye has made "significant progress" in improving its regime of anti-money laundering and combating the financing of terrorism, the Paris-based body said in a statement after the plenary meeting.
Turkish officials welcomed the move, which is seen as improving its international standing and potentially drawing in fresh investment.
"With this development, international investors' confidence in our country's financial system has become even stronger," Vice President Cevdet Yılmaz said on X.
"The decision will have extremely positive consequences for both our financial sector and our real sector," Yılmaz said.
A day earlier, he had said not upgrading Türkiye would amount to a political decision.
FATF President T. Raja Kumar, who is finishing his two-year term, said Türkiye was taken off the gray list because of the "substantial progress" that it has made.
Kumar said a FATF team visited Türkiye in May and confirmed that the country had taken "substantive steps" to improve its anti-money laundering regime, addressing all the items in its action plan.
As examples he cited Türkiye's complex investigations into and prosecutions of money laundering and terrorist financing.
Interior Minister Ali Yerlikaya said Türkiye would resolutely continue its fight against organized crime.
"We will with determination continue our fight against organized crime organizations, 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," Yerlikaya wrote on X.
There was little market reaction to the move, which was widely expected, with the Turkish lira firming slightly to 32.8845 against the dollar. Istanbul's main share index, BIST 100, was 0.5% higher.
"The good news around Türkiye, and the reforms from (Finance Minister Mehmet) Şimşek just keep on coming," said Tim Ash, a strategist at Bluebay Asset Management.
The FATF, set up by the G-7 to protect the global financial system, said in February that Türkiye "has substantially completed its action plan" and warranted an on-site assessment. It recently held talks in Türkiye to assess progress in curbing the money laundering and illegal financing concerns that prompted its downgrade in 2021.
Research suggests an upgrade could lead to more foreign direct investment and Yılmaz said inflows would accelerate.
Türkiye's foreign direct investment (FDI) inflows were $1.5 billion in the first quarter, down 52% from the quarterly average in the three years previous, according to the International Investors Association.
Türkiye has started attracting greater investor interest after implementing an economic policy reversal following a general election in May 2023, reversing years of loose policy and raising its benchmark policy rate to 50% from 8.5%.
There are some two dozen nations that are on the "gray list" and considered risky by the FATF, a body that groups countries from the United States to China to tackle financial crime. In February, it removed the United Arab Emirates (UAE) from the list.
Countries on the list undergo increased monitoring and must actively work with the FATF to correct deficiencies.
Alongside Türkiye, Jamaica was also removed from the "gray list," while Monaco and Venezuela were added.
The FATF also has a "blacklist" of nations that are considered high-risk jurisdictions.
The body urged countries to apply countermeasures against Iran and North Korea and warned about the latter's "illicit activities related to the proliferation of weapons of mass destruction (WMDs) and its financing."
It urged countries to end all business with North Korean banks and limit business with Pyongyang entities.
The FATF also urged countries to apply countermeasures to Iran, which it noted had not ratified the Palermo and Terrorist Financing Conventions.
