MASAK Lowers The Threshold Of Suspicious Transactions Related To Crypto Currency

MASAK Lowers The Threshold Of Suspicious Transactions Related To Crypto Currency

As is known, pursuant to Article 4(1) of Law No. 5549 on Prevention of Laundering Criminal Revenues, "In case that there is any information, suspicion or reasonable grounds to suspect that the asset, which is subject to the transactions carried out or attempted to be carried out within or through the obliged parties, is acquired through illegal ways or used for illegal purposes" the obliged parties must report these transactions to the Financial Crimes Investigation Board ("MASAK"). The obliged parties comprise of entities that engage in banking, insurance, private pension, capital markets, money lending and other financial activities. 

Within this scope, MASAK publishes guidelines for notification of suspicious transactions in accordance with Article 6 of MASAK General Communiqué Numbered 13. In 2014, MASAK published the Suspicious Transaction Reporting Guide (for Banks) ("Guidelines"). The Guidelines provides types of suspicious transactions in order to (1) ensure that the obliged parties have a common attitude, understanding and cooperation against the risk of being exploited for laundering proceeds of crime and terrorism financing, and (2) assist the obliged parties for identifying suspicious transactions. Nevertheless, the types of suspicious transactions identified in the Guidelines are only of a guidance nature and are provided for the purposes of assisting the obliged parties while they assess whether there is a suspicion or a reasonable reason for suspicion. In other words, the obliged parties should not interpret the examples provided in the Guidelines as an exhaustive list and should notify MASAK about transactions triggering suspicion, even if the transaction does not comply with any of the example provided within the Guidelines.

Against this background of the legislation, one can only assess whether transactions realized with crypto currencies should be considered as a suspicious transaction or not by making inferences from the examples in the Guidelines. That said, "transferring money from the customer accounts to intermediary entities, which sell bitcoin, for the purposes of buying bitcoin" was considered as a suspicious transaction in the Types Related to Banking Transactions section of the Guidelines' version 1.03, which was effective until September 11, 2019. Accordingly, MASAK's approach until September 11, 2019 was to consider any money transfer in connection with buying or selling bitcoin as a "suspicious transaction". Although the Guidelines' wording consists of only "bitcoin" term within this example, given that the Guidelines is not of an exhaustive structure (as mentioned above), it was possible interpret from this example as banks should report transactions concerning purchase of other crypto currencies to MASAK.

On the other hand, through the amendment introduced to the Guidelines on September 11, 2019, the Guidelines' version 1.04 prefers the term "crypto currency" instead of "bitcoin".
In addition, the current version does not exemplify all money transfers in connection with crypto currencies as suspicious; instead the Guidelines provides narrower and specific circumstances for a transaction to be considered as suspicious. The examples of suspicious crypto currency transactions within the Guidelines are as follow:

T-001- 3.47: "Transfer from customer accounts to domestic and international crypto currency exchanges or other real persons' or legal entities' accounts for the purposes of buying crypto currency, in frequency and amounts that does not fit the customer's profile".

T-001- 3.61: "Transfer to customer accounts as a result of a crypto currency sale, whose origin is unknown or suspected to be inapt with the relevant person's financial profile".

Having said that, it can be deduced that transactions, in connection with crypto currency exchanges, with an identified origin and with fitting frequency and amounts to relevant the customer profile may not be considered as suspicious transactions by MASAK. Indeed, it is also possible to argue as per the up-to-date version of the Guidelines that crypto currency issuers, exchanges, users and transactions are not categorically excluded as a whole and they are recognized by the legal system.

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