Gangster Videos Renew Review of Turkey’s Wealth Amnesty Law | Business and Economy News

Istanbul, Turkey – YouTube videos of convicted Turkish mafia boss Sedat Peker accusing government officials of corruption and others have captivated millions of people in recent weeks and have renewed scrutiny of a Turkish law that critics say constitutes a practical loophole for money laundering and the development of criminal activity.

A “wealth amnesty” law that came into effect in November allows individuals and businesses to repatriate cash, gold, foreign currency, securities and other assets held abroad, or to declare assets held in Turkey, without incurring a tax penalty.

The amnesty, championed by the ruling Justice and Development Party (AKP), is apparently aimed at boosting the Turkish economy hit by the pandemic.

Former Economy Minister and AKP Party MP Mustafa Elitas told Al Jazeera the government had not planned in advance how much wealth would be revealed as a result of the amnesty, which is set to expire at the end of this month. But, he said, the law is always good.

“It’s important because it brings additional hidden sources [of wealth] in our economy, ”he said, calling on the Turks to take advantage of the amnesty.

In March, President Recep Tayyip Erdogan urged Turkish citizens to seize the opportunity to bring “our national wealth” out of the shadows and invest it to help the economy.

Beijing has captivated millions with videos accusing government officials of corruption and other crimes [File: YouTube]

But financial crime experts and members of the Turkish opposition say the law is riddled with loopholes that criminals can use to clean up ill-gotten gains.

Under the amnesty, assets can be repatriated from abroad without asking questions. It also allows third parties, including legal representatives, company shareholders or agents, to report assets.

This means that assets held abroad in tax havens through shell companies can end up in Turkey with little or no control over how they were acquired or by whom. Assets can even be carried around the country in a suitcase and declared without further investigation of their origins.

Critics say this creates an opening for foreign criminals to use Turks to launder so-called “black” money.

“Wealth amnesty can create a risk of introducing black money or income obtained through unrecorded means into the system if done in a way that does not take adequate precautions, questions the source of the money or ignore it, “Transparency International Turkey president Oya Ozarslan told Al Jazeera.

“Considering that money laundering requires committing other crimes such as drugs, terrorism, etc. and waiting for an opportunity to enter the system to be erased, this risk is significant,” he said. -she adds.

But supporters of the law say such criticism is unfounded.

“This is completely false,” former Deputy Prime Minister Cevdet Yilmaz told Al Jazeera. “All these questions were taken into account when drafting this regulation. We have focused on issues such as the financing of terrorism and illicit money. We excluded such scenarios when drafting the regulation. Consequently, they do not have the right to make these claims.

Last fall, as the law was being drafted, Deputy Finance Minister Osman Dincbas, who was removed from his post in January, pushed back against opponents of the amnesty, noting that there were already anti-money laundering protection systems, including MASAK – the country’s Financial Crimes Investigation Board – and the global watchdog Financial Action Task Force (FATF).

How much silver, gold, jewelry and other valuables were brought into the country?

Erdogan Toprak, deputy of the Republican People’s Party

Relaxation of regulations to attract assets

The patrimonial amnesty, which entered into force in November, is the latest version of similar laws passed in 2008, 2013, 2016 and 2018. But previous versions imposed a small tax penalty on disclosed assets while the current law does not. imposes no levy.

Critics say AK Party lawmakers have repeatedly relaxed regulations not only to attract hidden assets overseas, but to allow wealthy local supporters to repatriate undeclared wealth and disclose assets held to the within the country without being subject to scrutiny.

“Today, if someone comes to the border and claims to have brought 30 million euros, all they have to do is fill out a form for the public prosecutor and the Financial Crimes Investigation Board,” said Professor Nedim Turkmen , expert in international finance. Turkish transactions and tax law at Galatasaray University.

Turkmens noted that under current law a person can deposit money in a Turkish bank one day and withdraw it the next day to cleanse them of any criminal affiliation.

“What bothers me the most is that this regulation not only aims to bring in assets from abroad, but also allows for the whitewashing of unregistered assets already in Turkey that could be obtained illegally, by especially through corruption, bid rigging, etc. ”he said.

During the first amnesty in 2008, more than Lit 47 billion ($ 5.4 billion at current exchange rates) of assets were recorded, generating more than Lit 1.5 billion ($ 173 million) in tax revenues. Another blow to transparency, the amount of wealth declared under the current amnesty is not being made public.

“We don’t know how much wealth has been legalized as a result of recent amnesties and regulations,” said Erdogan Toprak, opposition MP for the Republican People’s Party (CHP).

“How much money, gold, jewelry and other valuables have been brought into the country? The full value of the assets is no longer publicly available, ”he told Al Jazeera.

A fragile economy

Erdogan’s government faces a pressing need for foreign exchange and other durable assets.

Like the rest of the world, Turkey’s economy has been hit by lockdowns and restrictions from COVID-19. But it entered the pandemic on relatively fragile bases, thanks to debt-fueled growth policies that have made Turkey heavily dependent on external financing and vulnerable whenever investor sentiment turns against its currency, read it. .

The pound has lost nearly 20% of its value since Erdogan sacked a market-friendly central bank governor in March [File: Nicole Tung/Bloomberg]

Although Turkey was one of the few countries to record positive growth last year, the International Monetary Fund recently noted that “the same policies that have supported growth have also exacerbated pre-existing vulnerabilities.”

Turkey’s foreign exchange reserves have been drained and annual inflation is north of 16.5%. The pound has lost nearly 20% of its value since March, when Erdogan shocked investors by sacking a market-friendly central bank governor – the third leader he had opened the door to in two years.

Questions about the rule of law and Erdogan’s feuds with NATO allies, including the United States, also increased pressure on the lira.

Corruption and gangsters

While the wealth amnesty is touted by its supporters as a way to support Turkey’s economy, some critics argue that it exacerbates the country’s financial woes by facilitating corruption of those with close ties to the government.

“These are in fact assets stolen from the country and its people by companies and individuals allied with the government who have transferred their billions of dollars of wealth to tax havens,” Garo Paylan, a party deputy, told Al Jazeera. People’s Democratic Party (HDP) opposition.

“Corruption, nepotism, bribery and bid-rigging were used to get them. The AK party is trying to launder these illicit assets because it knows they will soon be eliminated, ”he said.

The latest amnesty also comes amid growing fears that foreign gangsters are increasingly settling in Turkey.

The headlines of murders and armed clashes between foreign mafia groups, especially in Istanbul, are regularly broadcast in the country’s newspapers.

But the problem is not necessarily limited to foreign criminal elements. According to former Istanbul police chief Adil Serdar Sacan, international mobsters are gaining a foothold in Turkey with the help of local gangsters.

“A foreign mafia member would never come to Turkey without the knowledge, guarantee and support of his local partners,” he told Al Jazeera.

“What we are seeing today tells us that certain circles within the current government are collaborating with the Mafia. Even the bosses of the mafia say it openly, ”he added.

Those accused of crimes by Beijing have denied any wrongdoing. But the videos have further tarnished Turkey’s already tarnished image [File: Umit Bektas/Reuters]

Sedat Peker, the former Turkish gang boss, began posting videos in May, laying unsubstantiated charges of corruption and other criminal acts against government officials, including Home Secretary Suleyman Soylu.

All those accused by Beijing have denied any wrongdoing. But the videos have further tarnished Turkey’s already tarnished image of illicit activity.

Turkey has long seen heroin cross its borders from Afghanistan to Europe, along with people and weapons. Billions of dollars from these illegal businesses often end up in offshore accounts, and critics suspect that some of them are heading to Turkey via the country’s wealth amnesties.

Turkey has come under pressure from the FATF to fight more effectively against the washing of black money. The FATF did not respond to Al Jazeera’s request for an interview.

But some would like to see global sheriffs exert more pressure on Ankara.

“Independent international institutions should be heard more on these issues,” a senior Turkish finance ministry official told Al Jazeera, speaking on condition of anonymity.

“I really stopped counting the number of these amnesties. Enough is enough, ”he added.

Former economy minister Ufuk Soylemez said the amnesty was also frowned upon by ordinary and law-abiding Turks.

“People who earn an honest living and pay their taxes feel offended by these amnesties,” he told Al Jazeera.

And some say the law’s benefits are paltry compared to the damage it inflicts on Turkey’s long-term economic health.

“Due to a lack of transparency, a democratic deficit and other negative factors, Turkey is no longer a country to invest in,” Toprak said. “This further damages our country’s already tarnished image and scares off foreign investors.”

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