1. What are the key legal frameworks and regulations related to white-collar crime in Türkiye that a general counsel should be aware of when conducting business in the region?
Turkish Criminal Code No. 5237 (‘TCC’) is the main legislation, addressing a spectrum of white-collar crimes such as fraud, abuse of trust, bribery, embezzlement, laundering of proceeds of crime, forgery and corruption of tender. There are also other legislations that address certain white-collar crimes. These are Capital Markets Law No. 6362 regulating insider trading and market manipulation crimes, Banking Law No. 5411 regulating embezzlement crime specifically for board members and employees of banks and the Turkish Commercial Code No. 6102 which include the unfair competition crimes.
Financial Crimes Investigation Board (‘FCIB’), or MASAK as known in Turkey, operating under the Ministry of Treasury and Finance of Türkiye is the competent body for combatting financial crimes, including money laundering, terrorism financing and other illicit financial activities which also qualify as white-collar crime. The FCIB legislation comprising several laws and regulations covering these topics are of paramount importance for businesses that qualify as ‘obliged party’ as defined in the Law No. 5549 on Prevention of Laundering Proceeds of Crime (‘AML Law’).
2. Can you provide insights into the specific white-collar crimes that are prevalent in Türkiye and the associated legal consequences for businesses?
Instances of corruption and asset misappropriation are more commonly observed in Türkiye. Typically, such offences fall under the categories of fraud or abuse of trust as defined by the TCC. White-collar crimes manifest across diverse sectors, with a notable prevalence in areas lacking adequate regulation. In line with the global trend, organisations that fail to implement effective compliance mechanisms or measures to prevent financial crimes are more susceptible to such offences.
As a fundamental principle of Turkish criminal law, criminal liability is attributed exclusively to natural persons based on their conduct and involvement in unlawful activities. In other words, only individuals can be considered as perpetrators of a crime. Businesses may be subject to security measures such as confiscation or cancellation of a permit.
Conversely, white-collar crimes may lead to businesses facing civil or administrative liability. For example, under the strict liability principle applied to employers, a business may be condemned to compensate the losses suffered by a third party due to the wrongful actions of an employee. Likewise, white-collar crimes that result in businesses breaching or failing to meet legal requirements, may lead to administrative investigations or result in administrative sanctions, including monetary fines.
3. How does the Turkish legal system address voluntary disclosure? Can a business receive leniency for voluntary disclosure?
Turkish law does not govern the concept of leniency explicitly. However, it may correspond to some extent to the Turkish criminal concept of effective repentance. A person who reports the crime he or she committed may benefit from such concept for some white-collar crimes, including fraud, certain forms of forgery, embezzlement and bribery.
4. What are the reporting obligations and procedures for companies in Türkiye when they suspect or discover instances of white-collar crime within their organisation?
Turkish law does not impose a general reporting obligation applicable to all businesses. The businesses that qualify as ‘obliged parties’ by the AML Law, should conduct due diligence for their customers and report the suspicious transactions they encounter related to money laundering and financing of terrorism to FCIB.
Listed companies are mandated by the Communiqué on Material Events Disclosure No II-15.1 to disclose information, events and developments that may affect the value or price of securities or influence investment decisions. This includes instances of white-collar crime within the organisation (either committed by a company executive or committed against the organisation).
Lastly, TCC establishes a specific criminal offence for not reporting a crime. However, this criminal sanction applies to individuals, not businesses.
5. How does the Turkish legal system handle investigations and prosecutions of white-collar crimes, and what role can general counsels play in ensuring compliance with legal requirements?
While Turkish Criminal Procedural Law No. 5271 sets out fundamental principles and rules governing investigations, there is no specific procedure for investigations and prosecutions of white-collar crimes in Turkish law. The power to conduct criminal investigations is vested in public prosecutor’s office, while the courts are the competent body for prosecution. In addition, several administrative authorities or regulatory bodies are empowered to conduct administrative investigations in matters which fall into their responsibility, under their organic laws. In such cases, these regulatory bodies are obliged to inform the public prosecutors if and when they encounter any criminal conduct.
It is also a duty of FCIB to notify the public prosecutor’s office in the presence of serious suspicions of money laundering or financing of terrorism. FCIB can also file a criminal complaint to the public prosecutor’s office in case it is determined that the crime of money laundering and financing of terrorism has been committed.
6. Are there any industry-specific regulations or considerations related to white-collar crime that general counsels should be aware of in Türkiye?
White-collar crimes are not regulated based on industry-specific legislations under Turkish law, except for the banking and capital markets legislation as specified in question one above. However, AML Law and its secondary legislation list obliged parties and impose certain liabilities on them to prevent the laundering of proceeds of crime and terrorist financing activities; such as notification of suspicious transactions, carrying out customer due diligence, training programmes etc.
7. What are the extraterritorial implications of Turkish white-collar crime laws, and how might they affect international businesses operating in the region?
As a general principle, Turkish criminal laws apply to all criminal offences committed, whether partially or entirely, within Türkiye. If the result of a crime occurs in Türkiye, such crime is also presumed to have been committed in Türkiye. Likewise, Turkish criminal laws apply to crimes committed abroad by Turkish citizens or against Turkish citizens or Türkiye’s national interest. Apart from that, there would be no extraterritorial effect of Turkish laws to an international business abroad.
8. Can you provide guidance on establishing effective internal controls and compliance programmes to prevent and detect white-collar crimes in a business operating in Türkiye?
Although there is no universally applicable approach, businesses can adopt certain best practices to customise internal controls and compliance programmes for proactive white-collar crime prevention and detection. Beginning with a thorough risk assessment helps organisations pinpoint vulnerable areas to white-collar crimes within their operations. We suggest repeating these assessments on certain periods. Subsequently, leveraging insights from this assessment, businesses can establish and implement resilient codes and policies focused on addressing white-collar crime. Training programmes and the use of available communication tools to increase awareness are also crucial to achieving these goals. We consider confidential whistleblowing/reporting mechanisms that allow employees to report suspicions of white-collar crimes without any fear of retaliation as a must as well as regular internal audits to assess the effectiveness of the programme. Businesses must ensure timely, impartial, and legally compliant investigations. Ultimately, leadership backing is pivotal for the success of any compliance initiative. Conducting third-party due diligence, and performing background checks on employees could also be implemented to increase the effectiveness of the programme.
9. How does the Turkish legal system approach corporate liability for white-collar crimes, and what steps can general counsels take to protect their organisations from legal consequences?
As mentioned under question two, legal entities are not subject to criminal liability under Turkish criminal law. Thus, individuals who committed or participated in a crime are personally liable regardless of the commission of the crime for the benefit of the entity. Businesses may only be exposed to administrative fines or security measures comprising confiscation and/or cancellation of permit.
Article 43/A of the Law on Misdemeanours No. 5326 stipulates that a corporate entity may be imposed an administrative fine up to approximately USD$8m if criminal offences including fraud, bribery, laundering of proceeds of crime, corruption of tender, terrorist financing, are committed in favour of such entity by the organisation’s representative or by persons taking charge within entity’s scope of activity, even though they are not a representative.
There are a couple of key steps that general counsels should take to protect
their organisations from legal consequences, such as:
- implement an effective compliance management system;
- conduct risk assessments;
- provide legal training;
- follow regulations and make sure contracts are aligned with changing
laws and business requirements; - adopt a response plan to be prepared against crisis;
- implement third-party due diligence procedures; and
- seek for insurance coverage for potential legal liabilities.
10. In case of a white-collar crime investigation, what legal strategies and defence mechanisms are available to companies in Türkiye, and how can general counsels best navigate such situations to protect their organisation’s interests?
Each investigation is unique, and the best steps to navigate through a white-collar investigation would depend on the circumstances of the matter at hand. However, certain strategies could help general counsels effectively navigate through a white-collar crime investigation in Türkiye. These include conducting an internal investigation on the alleged white-collar crime, considering parallel civil actions to distance the business from the crime or its perpetrators, engaging outside legal counsel specialising in white-collar crimes, cooperating with regulatory authorities within legal boundaries, enhancing compliance programmes, taking early actions to mitigate the losses suffered by the business or the third parties, preserving documents, negotiating settlements with affected parties, ensuring employee cooperation, managing public and third-party relations where required.