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

The United States has one of the world's most comprehensive anti-money laundering (AML) frameworks. Turkish-owned businesses operating in regulated U.S. industries — financial services, real estate, money services, casinos, and others — are subject to significant AML obligations under the Bank Secrecy Act (BSA) and its implementing regulations.

Failure to comply with AML obligations can result in severe civil and criminal penalties, reputational damage, and loss of operating licenses. This guide explains the U.S. AML framework, the industries most affected, and the compliance program requirements for Turkish-owned businesses.

The Bank Secrecy Act (BSA), enacted in 1970 and significantly expanded since, is the cornerstone of the U.S. AML framework. The BSA requires covered financial institutions to:

• Maintain records of certain transactions
• File reports of suspicious activity (SARs) and large cash transactions (CTRs)
• Implement AML compliance programs
• Verify the identity of customers (KYC)

The Financial Crimes Enforcement Network (FinCEN), a bureau of the U.S. Department of the Treasury, administers the BSA. FinCEN issues regulations, guidance, and enforcement actions related to AML compliance.

The Anti-Money Laundering Act of 2020 (AMLA) significantly expanded the U.S. AML framework, including:

• Expanding BSA coverage to include certain non-financial businesses
• Strengthening beneficial ownership requirements (leading to the Corporate Transparency Act)
• Increasing penalties for AML violations
• Expanding FinCEN's authority to issue subpoenas and share information

The following financial institutions are subject to full BSA/AML obligations:

• Banks and credit unions
• Broker-dealers
• Investment advisers (registered with the SEC)
• Mutual funds
• Insurance companies (for certain products)
• Futures commission merchants

Money Services Businesses (MSBs) are subject to BSA/AML obligations, including:

• Money transmitters (including payment processors and cryptocurrency exchanges)
• Currency dealers and exchangers
• Check cashers
• Issuers of money orders and traveler's checks
• Prepaid card issuers

Relevance for Turkish businesses: Turkish companies that operate payment processing, remittance, or currency exchange businesses in the United States are MSBs and must register with FinCEN and implement AML programs.

The real estate sector has been a significant focus of AML enforcement. FinCEN has issued Geographic Targeting Orders (GTOs) requiring title insurance companies in certain markets to report the beneficial owners of all-cash real estate purchases above specified thresholds.

Proposed rulemaking: FinCEN has proposed a rule that would require real estate professionals (brokers, agents, attorneys, and others) to file reports on non-financed residential real estate transactions. This rule, if finalized, would significantly expand AML obligations in the real estate sector.

Relevance for Turkish investors: Turkish investors who purchase U.S. real estate with cash — particularly in GTO-covered markets (New York, Miami, Los Angeles, and others) — should be aware that their transactions may be reported to FinCEN.

Casinos and card clubs are subject to BSA/AML obligations, including SAR filing, CTR filing, and AML program requirements.

For covered financial institutions, the BSA requires a written AML compliance program that includes the "Five Pillars":

Written policies and procedures that:

• Identify and assess money laundering risks
• Implement controls to mitigate identified risks
• Ensure compliance with BSA reporting and recordkeeping requirements

Designation of a qualified AML Compliance Officer who is responsible for:

• Day-to-day management of the AML program
• Ensuring compliance with BSA requirements
• Reporting to senior management and the board

Regular AML training for all relevant employees, covering:

• Overview of money laundering and terrorist financing
• The institution's AML policies and procedures
• How to identify and report suspicious activity

Regular independent testing (audit) of the AML program to:

• Assess the effectiveness of the program
• Identify gaps and weaknesses
• Ensure compliance with BSA requirements

Customer Due Diligence (CDD) requirements include:

• Customer Identification Program (CIP): Verifying the identity of customers at account opening
• Beneficial Ownership: Identifying and verifying the beneficial owners of legal entity customers (those who own 25% or more, plus one control person)
• Ongoing monitoring: Monitoring customer transactions for suspicious activity

Covered financial institutions must file a Suspicious Activity Report (SAR) with FinCEN within 30 days of detecting a transaction that:

• Involves $5,000 or more (or $2,000 for MSBs)
• The institution knows, suspects, or has reason to suspect involves money laundering, terrorist financing, or other financial crimes

SAR confidentiality: SARs are confidential — the institution cannot disclose to the subject of the SAR that a SAR has been filed.

Covered financial institutions must file a Currency Transaction Report (CTR) with FinCEN for any cash transaction exceeding $10,000 in a single business day.

Structuring: It is a federal crime to "structure" transactions — breaking up a large cash transaction into smaller transactions to avoid the CTR filing requirement.

AML penalties can be severe:

Enforcement actions: FinCEN has imposed multi-billion dollar penalties on major financial institutions for AML failures. Turkish-owned businesses should take AML compliance seriously.

1. Determine whether your business is a covered institution: Not all businesses are subject to BSA/AML obligations. Determine whether your U.S. business falls within a covered category.

2. Register with FinCEN if required: MSBs must register with FinCEN. Failure to register is a federal crime.

3. Implement a written AML program: If your business is a covered institution, implement a written AML program that meets the Five Pillars requirements.

4. Designate an AML Compliance Officer: Designate a qualified individual to be responsible for AML compliance.

5. Implement KYC/CDD procedures: Implement customer identification and beneficial ownership verification procedures.

6. Train employees: Ensure that all relevant employees receive regular AML training.

7. Engage AML counsel: AML compliance is a specialized area of law. Engage U.S. counsel with specific AML expertise.

AML compliance is a critical obligation for Turkish-owned U.S. businesses in regulated industries. The penalties for AML violations are severe, and FinCEN enforcement has intensified in recent years. A proactive, risk-based AML compliance program is essential.

ULF New York advises Turkish clients on BSA/AML compliance, AML program development, FinCEN registration, and AML enforcement defense. Contact us to discuss your AML compliance needs.

This article is for informational purposes only and does not constitute legal advice. AML regulations are subject to frequent change; consult qualified AML counsel for current guidance.