Turkey has become a key hub for money laundering due to deep-seated corruption, repeated amnesty programs and weak enforcement of financial regulations, allowing billions of dollars in illicit funds to enter the country, according to a special report published by the Kısa Dalga news website citing economists.
Experts warn that Turkey’s financial policies, particularly the “wealth amnesty” laws, which allow individuals and entities to repatriate previously undisclosed offshore assets and to declare previously undisclosed domestic assets without legal scrutiny or tax penalties, have created a haven for illegal money flows, with billions of dollars of unverified funds entering the economy. These funds, often linked to drug trafficking, human smuggling and arms deals, exploit legal loopholes and minimal oversight, making Turkey a prime laundering center, the report said.
The Financial Action Task Force (FATF), a global financial watchdog, placed Turkey on its gray list in 2021 due to failures to prevent money laundering and terror financing. While Turkey was removed from the list in June 2024 after implementing reforms, critics argue that systemic corruption and political protection of illicit financial networks persist.
One key factor in Turkey’s transformation into a laundering hub is the 2003 repeal of a law that required individuals to prove the legitimate origins of large financial gains. Former Financial Crimes Investigation Board (MASAK) Chairman Ramazan Başak told Kısa Dalga that the law’s removal allowed vast amounts of untraceable wealth to enter the system unchecked.
Wealth amnesty laws have been introduced repeatedly in Turkey since 2008. The most recent iteration, passed in July 2022, remained in effect until March 2023. These laws, originally intended for economic recovery, have been widely criticized for enabling the flow of illicit funds into the country.
Economists and financial analysts warn that Turkey’s failure to enforce strict anti-money laundering measures has encouraged organized crime networks to exploit the country’s financial system. Authorities have uncovered cases of money laundering through shell companies, fake invoices, real estate purchases and luxury goods acquisitions.
Murky banking practices further exacerbate the issue. Former Denizbank executive Seçil Erzan, for example, ran a fraudulent investment scheme, demonstrating how lax banking oversight enables financial misconduct. Banks frequently fail to flag suspicious transactions, allowing illegal funds to circulate freely.
Reza Zarrab, a Turkish-Iranian businessman who pleaded guilty in the US to evading sanctions on Iran, previously detailed in court how a vast corruption and bribery network in Turkey facilitated illicit financial flows.
In December 2013, bribery and corruption investigations shook the country. The probes implicated, among others, Zarrab, family members of several cabinet ministers and some of Turkish President Recep Tayyip Erdoğan’s children.
Despite the scandal resulting in the resignation of the cabinet members, the investigation was dropped after prosecutors and police chiefs were removed from the case. A parliamentary commission was also stymied. Erdoğan, government officials and the pro-government media described the investigations as an attempt to overthrow the government.
The report noted that as a result of this cover-up, bribes are commonplace in customs offices, financial institutions and law enforcement, enabling criminals to operate with impunity.
Much of the illicit wealth laundered in Turkey is later transferred abroad, with Swiss banks, Caribbean offshore accounts and European real estate markets among the top destinations, experts said. A Wealth Fund report found that from 2016 to 2019, 17,100 accounts containing at least $1 million each were moved out of Turkey, making it one of the top countries for capital flight.
The Turkish government’s reliance on unregulated capital inflows to offset economic shortfalls has serious consequences, experts say. The influx of illicit money distorts the economy, fuels inflation, erodes institutional trust and worsens corruption.
Experts warn that unless Turkey takes stronger action against money laundering — through stricter financial regulations, independent oversight, and enforcement — the cycle of economic instability, capital flight and criminal influence will continue.