* Deadline falls on Feb. 22
* Blacklist could curb foreign dealings with banks
* Law would allow easier freezing of suspect accounts
By Ozge Ozbilgin and Jonathon Burch
ANKARA, Jan 25 Turkey is scrambling to push
through a long-awaited anti-terrorism financing law before a
deadline next month to avoid being expelled from an
international watchdog and placed on its blacklist alongside
Iran and North Korea.
Turkey is already on a "grey list" of countries drawn up by
the 36-member Financial Action Task Force (FATF), a
money-laundering watchdog, for not implementing the legislation
required by its members despite pressing Ankara for years.
The FATF has warned Turkey if it does not pass the necessary
legislation, which would allow alleged "terrorist" accounts to
be frozen without a court order, by Feb. 22, it will be expelled
as a member of the group and blacklisted.
Such a move could restrict foreign activity with Turkish
banks, hamper Turkey's ability to raise funds abroad and could
affect its credit rating, which received a boost last year when
Fitch raised the country to investment grade.
"Potentially, this would be a crippling blow to Turkish
banks as they look to be more international in outlook, and have
been active in seeking to finance themselves increasingly
offshore in recent months," said Timothy Ash at Standard Bank.
On Friday, a parliamentary commission passed the draft bill,
which has been stalled since 2011, after two days of debates.
Despite strong resistance from the country's main opposition
party, Turkish officials have voiced confidence that the
legislation would be adopted by next month's deadline.
Part of the reason the bill has been held up is Turkey's
existing terrorism legislation. Opposition lawmakers fear the
law could be used to wrongly label people as terrorists.
Turkey has one of the highest arrest rates in the world for
terrorism charges and faces increasing criticism from the United
Nations and rights groups over what they see as poorly-defined
and broad-based laws which are regularly abused.
Around 100 journalists are in prison in Turkey, as well as
thousands of activists, lawyers, politicians, military officers
and others. Most are accused of plotting against the government
or supporting outlawed Kurdish militants.
Turkey already has existing laws on money-laundering but
these do not refer to the concept of "terrorism". While the
current bill under debate would meet the FATF's minimum
requirement, it falls short of laws enacted by other members.
"As often is the case in Turkey ... it has been difficult to
get policymakers to focus on the need for urgent reform until
the last minute," said Ash, who heads Standard Bank's emerging
"All our plans are pointing towards meeting the Feb. 22
deadline. Not meeting the Feb. 22 deadline is not on our
agenda," said a justice ministry official who asked not to be
The bill is expected to go before parliament in the first
week of February and would take at least one to one-and-a-half
weeks to be enacted but some officials said it would likely take
longer because of strong opposition to the law.
The FATF estimated last year that money-laundering and
related financial crimes cost between 2 percent and 5 percent of
global gross domestic product.
The watchdog body can make recommendations to any of the 36
countries that have signed a membership charter, as well as
other nations, but it has no power to carry out sanctions.
Turkey signed on as a member in 2001.
(Writing by Jonathon Burch; Editing by Nick Tattersall and Mark