Turkey’s Financial Crimes Investigation Board Introduced the Guidance on the Obligation of Identification of the Parties to the Trust Agreement Established in Foreign Countries

Financial Crimes Investigation Board of Turkey’s Ministry of Treasury and Finance (“MASAK”) has recently introduced the Guidance on the Obligation of Identification of the Parties to the Trust Agreement Established in Foreign Countries (“Guidance”).

In accordance with the Regulation on Measures to Prevent the Laundering of Criminal Proceeds and the Financing of Terrorism (“Regulation on Measures”), the obliged parties counted in this Regulation on Measures are obliged to identify the parties to the trust agreement established abroad and to take reasonable measures to identify the true beneficiaries of the contract. In addition, it has been explained that the purpose of this Guidance is to help obliged parties to understand this obligation brought within the scope of the principle of knowing the customer and to determine the measures to be taken within this framework.

The Guidance states that the trust agreement is defined in the Measures Regulation in accordance with the Financial Action Task Force (“FATF”) standards. In this context, in the Guidance, the trust agreement, which is a fiduciary transaction; It is explained that there are all kinds of legal relations that stipulate that an asset is left under the control of a trustee who is executing the contract for the benefit of a certain beneficiary or group of beneficiaries, by the settler, for the management, use or other dispositions of the said property.

In addition, it is stated in the Guidance that the trust agreement institution is established by the division of the powers over a right in the assets of the settlor between a trustee and a beneficiary.

According to the definitions made in the Guidance, the person establishing the trustee function within the framework of the trust agreement may be any natural person to whom the authority has been delegated according to the provisions of representation; It can also be a company that provides professional trusteeship services. Persons who are paid for this work and who provide professional trustee services may operate under the title of "trust company" depending on the laws of the country they are in. In addition, it is seen that lawyers who professionally aim to regulate all kinds of legal issues and relations in practice and to resolve them in accordance with legal rules can also be appointed as trustees. Persons who provide such professional services are also called "trust service providers". On the other hand, the trustee established by the trust agreement does not have a legal personality, and a legal personality arising from the agreement is not created according to the type of trustee. Therefore, in the recommendation of the FATF, trustees are considered in the legal formation category. Moreover, a specific type of trust agreement is the "express trustee" formation. Express trustee refers to a relationship of trust established by the founder, more than a contract, with a clearly stated statement of intent and usually on a written deed.

As per the Guidance, according to the Law No. 5549, obliged parties, within the scope of the principle of know your customer; before any transaction is made in the transactions made by them or mediated by them, they are obliged to determine the identities of those who make transactions and those on whose behalf or accounts are transacted and take other necessary measures.

Şafak Herdem, Esra Temur