The Central Bank of the Republic of Turkey introduced amendments to the Capital Movements Circular on March 16, 2021.
Turkish Account Banks’ Monitoring of Money Transfers
Prior to the amendment, as explained in our Client Alert dated May 4, 2018, Turkish banks were required to review the content of SWIFT messages transmitted regarding FX transfers from abroad to a Turkish resident’s account in order to identify whether the FX transfer is a loan utilized by the Turkish resident. The latest amendment expands the SWIFT message review requirement for Turkish banks to include TRY transfers from abroad.
Further, as explained in our other Client Alert dated February 19, 2019, Turkish banks are required to obtain the receiving company’s written declaration and the substantiating information and documents in order to determine whether unidentified FX transfers made from abroad to the Turkish company’s account for USD 50,000 or more are for loans utilized by the company. The amendment will also require the same declaration and documents for unidentified TRY transfers in the amount of TRY 250,000 or more.
Additional Exemption to the Obligation to Bring Loans Proceeds to Turkey
The amendment introduces a new exemption to the obligation to bring the proceeds of loans utilized from abroad to Turkey. Accordingly, Turkish residents can now utilize loans from abroad without bringing the proceeds thereof to Turkey to the extent that the loan refinances an existing loan utilized from abroad by the same borrower. However, the amount of the loan not utilized to refinance the loans obtained from abroad will still need to be brought into a Turkish bank account. Further, the Turkish resident borrower must submit a written declaration indicating that the loan is actually utilized to refinance existing loan(s) obtained from abroad.