Financial innovation creates new channels for criminals, Turkish minister says

"Financial innovation is a double-edged sword," the Turkish treasury and finance minister said, adding that the same features that make payments faster, cheaper, and more accessible also create new channels for criminals and terrorist financiers.

Attended the 5th No Money For Terror Ministerial Conference in Paris, Mehmet Simsek joined the panel on “Preventing the Misuse of Financial Innovation for Terrorism Financing.”

"Crypto-assets are now at the center of this new risk landscape. Transactions are executed in seconds, cross borders without friction, and provide access to global liquidity with a single click," he said on Turkish social media platform NSosyal.

"Many of these tools let users hide who they are," he said, adding that according to the Financial Action Task Force (FATF), stablecoins are increasingly becoming the preferred tool of terrorist financiers.

"They preserve value, move instantly across borders, and are easy to access, which is exactly why they are being exploited," he said.

Simsek noted that FATF standards must be applied consistently across jurisdictions; otherwise, criminals will always find the weakest link.

He said: "Türkiye acted early and decisively on crypto-related AML/CFT [Anti-Money Laundering and Combating the Financing of Terrorism] risks.

“In 2021, we brought VASPs [Virtual asset service providers] under AML/CFT obligations, implemented the travel rule, and introduced licensing and compliance requirements.”

He added that Türkiye also banned crypto ATMs outright, as the risks were simply too high. In several areas, and the country went beyond FATF recommendations.

"We introduced $3,000 daily and $50,000 monthly limits on stablecoin transfers, as well as mandatory waiting periods for transactions that do not meet travel rule requirements," he underlined.

He said6 criminal networks move funds in seconds; international cooperation must move at the same speed.

"When a suspicious wallet is identified, information must travel in hours, not weeks," he said.

He highlighted that financial innovation will continue to evolve, and so will the risks, "Strong international cooperation remains essential."