Anti-Money Laundering (AML) Compliance for Turkish-Owned U.S. Businesses

The United States operates one of the world's most rigorous anti-money laundering (AML) regulatory frameworks. For Turkish entrepreneurs, investors, and companies with U.S. operations, understanding and complying with these requirements is not optional — it is a legal obligation with serious criminal and civil consequences for violations.

AML compliance in the U.S. is governed primarily by the Bank Secrecy Act (BSA), enforced by the Financial Crimes Enforcement Network (FinCEN), a bureau of the U.S. Department of the Treasury. The framework has been significantly strengthened in recent years through the Anti-Money Laundering Act of 2020 (AMLA) and the Corporate Transparency Act (CTA), which introduced sweeping new beneficial ownership reporting requirements that directly affect Turkish-owned U.S. entities.

This guide explains the AML landscape, identifies which Turkish-owned businesses are most affected, and outlines the practical compliance steps required.

Enacted in 1970 and substantially amended multiple times since, the BSA is the cornerstone of U.S. AML law. It requires financial institutions — and certain non-financial businesses — to:

• Maintain records of cash transactions and financial activities
• File reports with FinCEN when suspicious activity is detected
• Implement AML programs with internal controls, designated compliance officers, employee training, and independent audits
• Verify customer identities through Know Your Customer (KYC) procedures

The AMLA represented the most significant overhaul of U.S. AML law in decades. Key provisions include:

• Expanded FinCEN's authority and resources
• Strengthened whistleblower protections and rewards
• Increased penalties for AML violations
• Required FinCEN to establish national AML/CFT priorities
• Mandated beneficial ownership reporting (implemented through the CTA)

The CTA, effective January 1, 2024, requires most U.S. corporations, LLCs, and similar entities to report Beneficial Ownership Information (BOI) to FinCEN. This is one of the most significant compliance obligations for Turkish-owned U.S. businesses.

Who must report: Any U.S. entity that does not qualify for an exemption (there are 23 exemptions, primarily for large publicly traded companies, regulated financial institutions, and certain inactive entities).

What must be reported:

• Full legal name of each beneficial owner
• Date of birth
• Residential address
• Unique identifying number (passport, driver's license, or FinCEN identifier)

Who is a beneficial owner: Any individual who (1) owns or controls 25% or more of the entity's ownership interests, or (2) exercises substantial control over the entity (including senior officers and individuals with authority over important decisions).

Deadlines:

• Entities formed before January 1, 2024: Initial report due January 1, 2025
• Entities formed in 2024: Report due within 90 days of formation
• Entities formed after January 1, 2025: Report due within 30 days of formation
• Updates required within 30 days of any change in beneficial ownership information

Penalties for non-compliance: Civil penalties of up to $591 per day (adjusted for inflation) and criminal penalties of up to $10,000 and two years imprisonment.

Turkish nationals operating money services businesses in the U.S. — including currency exchange businesses, money transmitters, check cashers, and prepaid card issuers — face the most stringent AML obligations. MSBs must:

• Register with FinCEN
• Implement a comprehensive AML program
• File Currency Transaction Reports (CTRs) for cash transactions over $10,000
• File Suspicious Activity Reports (SARs) when suspicious activity is detected
• Comply with state-level licensing requirements (which vary significantly by state)

Turkish investors in U.S. real estate — particularly those involved in all-cash transactions — face increasing AML scrutiny. FinCEN has issued Geographic Targeting Orders (GTOs) requiring title insurance companies to identify the beneficial owners behind shell companies purchasing residential real estate in certain markets (including New York, Miami, Los Angeles, and others).

The Anti-Money Laundering Act of 2020 directed FinCEN to issue a permanent rule extending AML requirements to real estate professionals. A proposed rule is expected to require real estate professionals to file reports on non-financed residential real estate transactions involving legal entities or trusts.

Turkish companies engaged in international trade with U.S. counterparties must be aware of trade-based money laundering (TBML) risks. U.S. Customs and Border Protection (CBP) and FinCEN monitor for:

• Over- or under-invoicing of goods
• Multiple invoicing for the same shipment
• Falsely described goods
• Unusual payment terms or third-party payments

While the U.S. has not yet fully extended BSA obligations to lawyers and accountants (unlike the EU's AML directives), Turkish-owned accounting firms, law firms, and consulting businesses serving financial clients should implement voluntary AML controls. FinCEN has signaled intent to extend formal AML requirements to these sectors.

Turkish entrepreneurs operating cryptocurrency exchanges, digital asset platforms, or virtual currency businesses in the U.S. are treated as MSBs and face full BSA/AML obligations, including FinCEN registration, AML program requirements, and SAR/CTR filing obligations.

Businesses subject to BSA requirements must implement a written AML program containing four core elements:

Internal Policies, Procedures, and Controls

• Transaction monitoring procedures
• Customer due diligence (CDD) standards
• Enhanced due diligence (EDD) for high-risk customers
• Record retention policies (generally 5 years)

Designated Compliance Officer A qualified individual must be designated as the AML compliance officer, responsible for day-to-day program oversight, regulatory reporting, and employee training.

Employee Training Program All relevant employees must receive regular AML training covering:

• How to identify suspicious activity
• Reporting obligations and procedures
• Red flags specific to the business type
• Consequences of non-compliance

Independent Testing/Audit The AML program must be independently tested (by internal audit or an external firm) to assess its effectiveness. Testing frequency depends on the business's risk profile.

FinCEN's Customer Due Diligence Rule (effective 2018) requires covered financial institutions to:

• Identify and verify the identity of customers
• Identify and verify the identity of beneficial owners of legal entity customers (those owning 25%+ or exercising control)
• Understand the nature and purpose of customer relationships
• Monitor customer transactions for suspicious activity

For Turkish-owned businesses serving other businesses (B2B), this means collecting and verifying information about the beneficial owners of corporate clients — a process that can be time-consuming but is legally required.

Enhanced Due Diligence (EDD) is required for higher-risk customers, including:

• Politically Exposed Persons (PEPs) and their family members
• Customers from high-risk jurisdictions (Turkey is on the FATF "grey list" — see below)
• Customers with complex ownership structures
• Customers in high-risk industries (gambling, cannabis, cryptocurrency)

Financial institutions and MSBs must file a Suspicious Activity Report (SAR) with FinCEN within 30 days of detecting a transaction (or attempted transaction) of $5,000 or more that involves funds from illegal activity, is designed to evade reporting requirements, or lacks a lawful purpose.

SAR filing is confidential — the subject of the report cannot be notified that a SAR has been filed. Tipping off a SAR subject is a federal crime.

Common SAR triggers for Turkish-owned businesses:

• Customers structuring transactions to avoid $10,000 CTR threshold ("structuring")
• Unusual cash activity inconsistent with the customer's business
• Transactions involving jurisdictions with high money laundering risk
• Customers reluctant to provide identification or beneficial ownership information
• Rapid movement of funds through accounts with no apparent business purpose

Any business that receives more than $10,000 in cash in a single transaction (or multiple related transactions in a single day) must file a CTR with FinCEN within 15 days. This applies to:

• Banks and financial institutions
• MSBs
• Casinos
• Dealers in precious metals, stones, or jewels
• Businesses receiving cash in the ordinary course of trade

Important: Structuring transactions to avoid the $10,000 threshold — even if the underlying funds are legitimate — is itself a federal crime ("structuring" or "smurfing") carrying penalties of up to 5 years imprisonment.

In October 2021, the Financial Action Task Force (FATF) placed Turkey on its "grey list" (officially, the list of "Jurisdictions Under Increased Monitoring"). Turkey was removed from the grey list in June 2024 after demonstrating significant improvements in its AML/CFT framework.

During the grey list period, Turkish-owned U.S. businesses faced:

• Heightened scrutiny from U.S. financial institutions
• Increased difficulty opening and maintaining U.S. bank accounts
• Enhanced due diligence requirements from U.S. counterparties
• Greater regulatory attention from FinCEN and bank examiners

Following removal from the grey list:

• The formal enhanced scrutiny requirements have eased
• However, U.S. financial institutions may maintain internal risk policies that continue to treat Turkish-connected transactions with elevated caution
• Turkish-owned businesses should be prepared to explain their ownership structure and source of funds when establishing U.S. banking relationships

Practical recommendation: Turkish-owned U.S. businesses should maintain comprehensive documentation of their ownership structure, source of funds, and business activities — even now that Turkey is off the grey list — as U.S. banks and compliance departments may continue to apply heightened scrutiny based on institutional risk policies.

AML compliance in the U.S. cannot be separated from sanctions compliance. The Office of Foreign Assets Control (OFAC) administers and enforces U.S. economic and trade sanctions programs.

Turkish-owned U.S. businesses must screen:

• All customers, vendors, and counterparties against OFAC's Specially Designated Nationals (SDN) list
• All transactions for potential sanctions nexus
• All jurisdictions involved in transactions against OFAC's country-based sanctions programs

Key sanctions programs relevant to Turkish-connected businesses:

• Iran sanctions — Turkey has historically had significant trade with Iran; U.S. businesses (including Turkish-owned ones) are prohibited from facilitating transactions that violate Iran sanctions
• Russia sanctions — Following the 2022 invasion of Ukraine, extensive sanctions were imposed on Russia; Turkish companies with Russian business connections must carefully screen U.S. transactions
• Syria sanctions — Comprehensive sanctions remain in place

OFAC violations can result in civil penalties of up to $1 million per violation and criminal penalties including imprisonment. OFAC operates a strict liability standard for civil violations — intent is not required.

1. File BOI Report with FinCEN — If your U.S. entity was formed before January 1, 2024 and you have not yet filed, do so immediately. Penalties accrue daily.

2. Assess your AML obligations — Determine whether your business is a "financial institution" or MSB under the BSA. If so, a formal AML program is legally required.

3. Screen against OFAC SDN list — Implement a process to screen customers and counterparties against the OFAC SDN list before onboarding and on an ongoing basis.

4. Document source of funds — Maintain clear documentation of the source of capital invested in your U.S. business, particularly if funds originated from Turkey or were transferred through multiple jurisdictions.

5. Implement KYC procedures — For businesses serving other businesses, collect and verify beneficial ownership information for corporate clients.

6. Train employees — Ensure all relevant staff understand AML red flags and reporting obligations.

7. Conduct annual AML risk assessment — Assess your business's exposure to money laundering risk and adjust controls accordingly.

8. Maintain records — Retain transaction records, customer identification documents, and SAR/CTR filings for at least 5 years.

9. Engage AML counsel — Given the complexity and severity of penalties, Turkish-owned businesses with significant U.S. financial activity should retain U.S. legal counsel with AML expertise.

The consequences of AML violations in the U.S. are severe:

Beyond financial penalties, AML violations can result in:

• Loss of banking relationships (de-risking)
• Reputational damage affecting business relationships
• Debarment from U.S. government contracts
• Immigration consequences for foreign national owners

AML compliance is a non-negotiable aspect of operating a business in the United States. For Turkish-owned businesses, the combination of BOI reporting requirements, potential FATF-related scrutiny, OFAC sanctions exposure, and sector-specific BSA obligations creates a complex compliance landscape that requires proactive management.

The good news is that compliance is achievable with proper planning, appropriate internal controls, and qualified legal and compliance counsel. The cost of a robust AML compliance program is a fraction of the potential penalties for non-compliance — and far less than the reputational and operational damage that AML violations can cause.

ULF New York advises Turkish companies and investors on U.S. AML compliance requirements, FinCEN reporting obligations, OFAC sanctions screening, and the Corporate Transparency Act's beneficial ownership reporting rules. Contact us to assess your compliance posture.

This article is for informational purposes only and does not constitute legal advice. AML regulations are complex and fact-specific. Consult qualified U.S. legal counsel for advice tailored to your situation.