The “Turkey is back on the investment radar” hype industry sprung into action on June 28 when the Paris-based Financial Action Task Force (FATF) announced that it has removed the country from its grey list.

It was in October 2021 that FATF, an anti money laundering and terrorist financing watchdog set up by the G7, included Turkey on the list.

To get itself extricated from the gallery of rogues, Turkey, says Ankara, has dedicated more resources to its financial intelligence unit to supervise anti-money laundering operations and ensure compliance by high-risk sectors on matters pertaining to avoiding the financing of terrorism, with increased on-site inspections.

The country says it has also applied dissuasive sanctions for breaches, in particular for unregistered money transfer services and exchange offices.

It has also enhanced the use of financial intelligence to support investigations and increased proactive disseminations, say officials.

What’s more, Turkey is said to have also undertaken more complex money laundering investigations and prosecutions while setting out clear responsibilities and measurable performance objectives and metrics for responsible authorities.

The country has also conducted more financial investigations in terrorism cases related to UN-designated groups while implementing a risk-based approach for the oversight of non-profit organisations.

Following the FATF decision, the Erdogan regime has been claiming, and much of the media has been circulating, that capital inflows to Turkey will boom.

Chart by BloombergHT (BHTArastirma): A look at the shadowy years (2011-2014 and 2021-1H24) when Turkey was on the grey list. The chart does not suggest a correlation between portfolio flows and the grey list.

In 2020, the Erdogan regime and the media also circulated the idea that portfolio inflows would boom after Turkey joined Euroclear Bank, which provides settlement services for financial papers. You can check the results that followed that assertion in the graph above.

The removal from the grey list does not, meanwhile, mean that no black or grey money is currently being laundered in Turkey.

The justification for the decision provided by Paris-based FATF suggests that the focus was on the so-called “hawala system” used by jihadist organisations for money transfers.

Recently, Turkey has conducted some operations against exchange offices that provide “hawala” services.

These operations do not mean that the hawala system has been entirely shut down.