Turkey-UAE Financial Crime Nexus: AML Risks and Considerations

AML Guide · August 2026

Turkey’s relationship with the Financial Action Task Force has been a significant factor in the evolution of AML compliance expectations across the Middle East.

Turkey’s FATF Grey List Journey

The FATF places jurisdictions on the grey list, formally known as Jurisdictions under Increased Monitoring, when they have strategic deficiencies in their AML/CFT regimes and have committed to addressing those deficiencies within an agreed timeframe. Being placed on the grey list carries reputational consequences and may affect a jurisdiction’s correspondent banking relationships and international financial standing.

Turkey was placed on the FATF grey list in October 2021. The placement followed the FATF’s assessment of Turkey’s AML/CFT framework, which found strategic deficiencies in several areas. The FATF’s mutual evaluation of Turkey, published in December 2019, had identified areas requiring improvement, including in the supervision of DNFBPs, the transparency of beneficial ownership, the regulation of money and value transfer services and the use of financial intelligence in money laundering investigations.

Turkey undertook a programme of legislative and institutional reform during its grey list period, including amendments to its AML legislation, improvements to the powers and capacity of MASAK (Turkey’s Financial Crimes Investigation Board) and enhancements to the supervision of higher-risk sectors. The FATF removed Turkey from the grey list in October 2022, acknowledging the progress made in addressing the identified deficiencies.

Turkey’s removal from the grey list within approximately 12 months of placement was relatively rapid and reflected the substantive nature of the reforms undertaken. However, the FATF follow-up reports, including the 2023 follow-up report, noted that Turkey still had one Recommendation rated partially compliant and areas where implementation remained in progress. Turkey is subject to ongoing follow-up review, and the FATF’s fifth round mutual evaluation is scheduled for 2025-2026.

The FATF Recommendations do not constitute domestic law in Turkey. Turkey implements its AML/CTF obligations through its own legislation, primarily Law No. 5549 on the Prevention of Laundering Proceeds of Crime and associated regulations. Financial institutions operating in Turkey or with Turkish counterparties should comply with the specific requirements of Turkish AML legislation and the guidance issued by MASAK and sector-specific regulators.

Turkey-UAE Trade and Investment Surge

The early 2020s marked a significant recalibration of Turkey-UAE bilateral relations. Following years of regional competition, the two countries moved toward a diplomatic rapprochement that translated into expanding trade and investment activity. Turkish companies increased their engagement with UAE markets, UAE sovereign wealth funds and private investors expanded their presence in Turkey, and bilateral trade volumes grew across multiple sectors.

The sectors with the most significant bilateral trade activity include gold and precious metals, energy products, machinery, textiles and agricultural products. The gold trade is particularly notable given that both Turkey and the UAE feature prominently in global gold markets, and gold trade between the two countries presents TBML vulnerabilities that compliance teams should recognise.

Real estate is another significant dimension of Turkey-UAE financial flows. Turkish nationals and Turkish-incorporated entities have purchased real estate in the UAE, particularly in Dubai and Abu Dhabi, and UAE nationals and entities have invested in Turkish real estate. These cross-border property investments can serve as legitimate wealth management vehicles and can equally be exploited for money laundering purposes if the source of funds is not properly verified.

Trade-Based Money Laundering Between Turkey and the UAE

The expansion of Turkey-UAE trade has created conditions for trade-based money laundering activity. The techniques most commonly associated with TBML in this corridor include over-invoicing and under-invoicing of goods, the manipulation of commodity prices for gold and precious metals, and the use of fictitious trade documentation to justify cross-border fund transfers.

The FATF Recommendations provide the international framework for TBML controls, with Recommendation 11 on record-keeping, Recommendation 16 on wire transfers and Recommendation 22 on DNFBPs being directly relevant to TBML risk in the Turkey-UAE context. The FATF Recommendations do not create domestic law obligations; Turkish and UAE legislation implements these standards through their own regulatory requirements.

Turkey’s FATF MER 2019 noted that the country faced significant money laundering risks from drug trafficking, migrant smuggling, human trafficking and fuel smuggling, with the proceeds of these crimes providing the predicate activity that TBML schemes seek to launder. UAE’s FATF MER 2020 identified gold trade and commodity markets as significant ML risk areas. The bilateral dimension of TBML risk between Turkey and the UAE is heightened by the intersection of these two risk profiles.

Financial institutions providing trade finance or processing cross-border wire transfers related to Turkey-UAE trade should apply enhanced due diligence that includes verification of trade documentation, screening of trade counterparties against sanctions and PEP lists, and monitoring for price anomalies that may indicate commodity manipulation.

Gold Trade Risk in the Turkey-UAE Corridor

Both Turkey and the UAE are significant participants in global gold markets, and gold constitutes a notable component of bilateral trade. Turkey is a major gold consumer and investor market, while the UAE serves as a major gold trading and re-export hub. The intersection of these two gold markets creates specific TBML vulnerabilities.

Gold is amenable to TBML for several reasons. Its value is high relative to its weight, making it an efficient mechanism for moving large values across borders. Its price is established on global markets, but transactions can be priced at variance from market benchmarks based on claimed differences in purity, form and delivery terms. Gold can be melted, refined and re-priced, creating legitimate-seeming documentation for price adjustments that are in fact used to move value.

The FATF MER UAE 2020 specifically identified dealers in gold and other precious metals and stones as a higher-risk sector requiring improved supervision. The FATF MER Turkey 2019 noted similar concerns about the precious metals trade in Turkey. For compliance teams at financial institutions active in the Turkey-UAE gold trade corridor, these findings reinforce the need for calibrated AML controls that reflect the specific vulnerabilities of gold market transactions.

Shell Companies and Corporate Structure Risk

Turkey’s FATF MER 2019 identified transparency of beneficial ownership as an area requiring improvement, noting that the information available on the ultimate beneficial owners of Turkish legal persons was not always adequate to support effective AML investigations. The 2023 follow-up report reflected some progress on this issue, though Turkey still had one Recommendation rated partially compliant in the beneficial ownership area as of the most recent follow-up assessment.

The use of shell companies in Turkey-UAE financial flows represents a risk that compliance teams should manage through robust beneficial ownership verification. Turkish corporate entities used as counterparties in UAE transactions, Turkish-owned entities registered in UAE free zones, and joint venture structures involving Turkish and UAE counterparties all require enhanced due diligence that identifies the ultimate beneficial owner and assesses the commercial rationale for the structure.

The FATF Recommendations (Recommendation 24 on transparency and beneficial ownership of legal persons) require that countries ensure that adequate, accurate and timely information on beneficial ownership is available to competent authorities. Turkey’s implementation of this requirement has been a subject of FATF scrutiny and ongoing development.

Turkish Politically Exposed Persons

Turkey’s political landscape creates a specific PEP risk for financial institutions. Turkish PEPs, including government ministers, senior officials, military commanders and their family members, may hold assets, business interests or bank accounts in the UAE that require enhanced due diligence under FATF Recommendation 12 and the domestic PEP frameworks implemented by UAE regulators.

The FATF Recommendations require that financial institutions have systems to identify PEPs, apply enhanced due diligence to PEP relationships and ongoing monitoring for PEP accounts. In the Turkey-UAE context, the complexity of ownership structures through which Turkish PEP interests may be held, the potential for involvement of family members and close associates as nominal beneficial owners, and the need to screen against sanctions lists in addition to domestic PEP requirements all contribute to the complexity of managing this risk.

Financial institutions providing services to Turkish corporate entities or Turkish nationals in the UAE should ensure that their screening processes include comprehensive checks against sanctions lists, PEP databases and adverse media sources, and that beneficial ownership verification identifies any Turkish government-affiliated ultimate beneficial owners.

AML Cooperation Between Turkey and the UAE

Bilateral AML cooperation between Turkey and the UAE has developed as the bilateral financial relationship has expanded. This cooperation includes the exchange of financial intelligence between MASAK and the UAE Financial Intelligence Unit, mutual legal assistance in criminal matters and operational cooperation between law enforcement agencies.

Turkey’s FATF MER 2019 noted that Turkish authorities demonstrated a substantial level of effectiveness in cooperation with foreign counterparts, including in sharing information both spontaneously and on request. The FATF MER UAE 2020, however, noted that UAE authorities did not always make sufficient use of formal international legal assistance processes, though informal cooperation was stronger.

For compliance teams, the quality of bilateral AML cooperation has practical implications for the handling of suspicious activity involving Turkey-UAE flows. Where a compliance investigation identifies a potential link to Turkish predicate activity, or where a suspicious transaction involves Turkish counterparties, the suspicious activity report should be filed promptly and should reflect awareness of the bilateral cooperation channels that exist between the two jurisdictions.

Conclusion

The Turkey-UAE financial corridor presents financial crime risks that have evolved alongside the bilateral relationship. Turkey’s FATF grey list experience and its subsequent removal reflect a period of intensive reform in Turkey’s AML/CFT framework, though ongoing FATF follow-up and Turkey’s fifth round evaluation scheduled for 2025-2026 indicate that the international community’s attention to Turkey’s AML regime will remain.

The intersection of Turkey’s gold market risk, its trade exposure to predicate offences including fuel smuggling and drug trafficking, its DNFBP sector vulnerabilities and the expanding bilateral trade and investment relationship with the UAE creates a corridor in which TBML, shell company exploitation and PEP-related money laundering risks all require active management.

For compliance leaders with Turkey-UAE exposure, the practical response involves ensuring that risk assessments specifically address the bilateral corridor, that gold trade and commodity transactions are subject to calibrated monitoring, that beneficial ownership verification is sufficiently robust to identify Turkish-affiliated ultimate beneficial owners, and that suspicious activity reporting reflects awareness of the bilateral enforcement environment.