What Is New On MASAK's Suspicious Transaction Reporting Guideline For Crypto Asset Service Providers?

The Suspicious Transaction Reporting Guideline for Crypto Asset Service Providers has been updated by the Turkish Financial Crimes Investigation Board (MASAK) and came into force on July 26, 2024. The revised guidelines cover additional sector-specific and suspicious transaction types to address evolving crime typologies, enhancing preventive measures against financial crimes. Our article provides a detailed overview of these updates.

Turkish Financial Crimes Investigation Board ("MASAK") has updated the Suspicious Transaction Reporting Guideline for Crypto Asset Service Providers ("Updated Guideline")¹ in order to stay compliant with the emerging needs of relevant stakeholders due to rapid technological developments. The Updated Guideline has entered into force as of July 26, 2024.²

Background

In response to the potential for crypto assets to be exploited for money laundering and terrorist financing, a significant regulatory expansion has been implemented on May 1, 2021. Presidential Decree No. 3941 broadened the scope of the Regulation on Measures Regarding Prevention of Laundering Proceeds of Crime and Financing of Terrorism to encompass crypto asset service providers. As a result, crypto asset service providers, along with banks, capital market brokerage houses, portfolio management companies, payment service providers, and electronic money providers, are now obliged to adhere to stringent anti-money laundering ("AML") and counter-terrorist financing ("CTF") measures.

Following these developments, MASAK published guidelines for setting the framework for their obligations including the first version of Suspicious Transaction Reporting Guideline for Crypto Asset service Providers on April 18, 2022. (see our article on MASAK Crypto Asset Service Providers Guideline here.)

New Requirements

In summary with the updated Suspicious Transaction Reporting Guidelines:

• A suspicious transaction reporting form has been developed in accordance with the operational framework of Crypto Asset Service Providers and the transaction framework of crypto assets,
• The Suspicious Transaction Notification Form was simplified to cover all current financial technologies,
• Sector-specific transaction and account types have been added,
• New types of suspicious transactions have been added, taking into account evolving and changing crime typologies,
• The categories of terrorist organization information and Financing the Proliferation of Weapons of Mass Destruction have been added to the notification categories,
• Checkpoints have been added to enhance the quality of notifications in the description field for suspicious transactions,
• Reference value tables have been updated and coding has been changed,
• Identification type and Intermediary Financial Institution information sections have been added,
• New categories of suspicion have been added, making suspicion category selection mandatory. Updated Guideline identifies various crimes, including capital market offenses, forgery of private and official documents, terrorist financing, and fraudulent bankruptcy. Additionally, it categorizes suspicious transactions by their nature and outlines the channels through which these transactions occur, such as ATMs, branch offices, the internet, and POS devices.
• The submission method for suspicious transaction reporting has been updated to allow electronic submission by obligors, except in mandatory cases. For paper submissions, the updated form must be used and wet-signed by the person issuing it. While the types of transactions subject to Suspicious Transaction Reporting with Deferral Request remain unchanged, reporting must be done using the updated form. The new form also includes a section on the urgency of reporting.

Conclusion

The Suspicious Transaction Reporting Guideline and Form, which govern procedures and principles for Suspicious Transaction Reporting specific to the Crypto Asset Service Providers sector, have been updated. The update aims to make suspicious transaction reporting faster and more efficient. Sector-specific transaction and account types, as well as additional suspicious transaction types have been included to address evolving crime typologies. This broader regulation aims to enhance preventive measures against financial crimes through crypto asset service providers.

With thanks to Berke Şengün for his assistance.

References

Kripto Varlık Hizmet Sağlayıcıları Şüpheli İşlem Bildirimi Rehberi ve Masak Online Sistemi Güncellendi (Only in Turkish). (2024, July 23). Retrieved from Republic of Türkiye - Ministry of Treasury and Finance - Financial Crimes Investigation Board: https://masak.hmb.gov.tr/duyuru/kripto-varlik-hizmet-saglayicilari-supheli-islem-bildirimi-rehberi-ve-masak-online-sistemi-guncellendi

Özgün, K. A., & Anaeli, A. G. (2021, May 18). Overview of the MASAK Guide on Basic Principles of Crypto Asset Service Provider Obligations. Retrieved from CBC Law: https://www.cbclaw.com.tr/en/overview-masak-guide-on-basic-principles-crypto-asset-service-provider-obligations

Şüpheli İşlem Bildirim Rehberi - Kripto Varlık Hizmet Sağlayıcıları (Only in Turkish).(2024, July 26). Retrieved from Republic of Türkiye - Ministry of Treasury and Finance - Financial Crimes Investigation Board: https://ms.hmb.gov.tr/uploads/sites/12/2024/07/KVHS-REHBER-2-0.pdf

Footnotes

1. (Şüpheli İşlem Bildirim Rehberi - Kripto Varlık Hizmet Sağlayıcıları (Only in Turkish), 2024)

2. (Kripto Varlık Hizmet Sağlayıcıları Şüpheli İşlem Bildirimi Rehberi ve Masak Online Sistemi Güncellendi (Only in Turkish), 2024)