Turkey Sets Conditions for Approval of Terror-Finance Law

Turkey may not meet demands from other countries to freeze terrorists’ assets unless they reciprocate, Justice Minister Sadullah Ergin said, as a parliamentary committee approved a draft law to block the financing of terrorist groups.

“Turkey will be able to ask individual countries to apply measures it needs in its struggle against terrorism,” the state-run Anatolia agency quoted Ergin as saying during the debate over the draft law on parliament’s Justice Committee. “Turkey will apply reciprocity to similar demands from individual countries.”

Turkey risks being blacklisted, along with Iran and North Korea, if it doesn’t pass the law by the Feb. 22 deadline set by the Organization for Economic Cooperation and Development’s Financial Action Task Force. Ergin says that may cause problems with money transfers and credits, leading to higher interest rates and inflation.

The government has accused some Western countries of failing to apply sanctions against fundraising by the Kurdistan Workers’ Party or PKK, which is fighting for autonomy in Turkey’s southeast and is listed as a terrorist group by the European Union and U.S. Turkish authorities say they will only carry out an automatic asset-freeze for suspects who are listed by the United Nations.

Turkey reminded Belgium in a meeting in Brussels this week that it was not meeting its responsibilities in the fight against terrorism, Ergin said.

Compliance Review

Parliament will pass the law before the deadline, though the new rules may not satisfy international demands, Hakki Koylu, deputy chairman of the justice committee, said yesterday.

The Task Force rules require Turkey to freeze suspect bank accounts even without a judicial ruling. The Turkish draft law foresees setting up a special government body which will evaluate each demand separately.

The Task Force will meet in Paris between Feb. 20-22 to assess the level of compliance by members and review “progress made by Turkey to improve its counter-terrorist financing regime,” the organization said on its website yesterday.

It told Turkey on Oct. 19 to tighten laws blocking the financing of terrorist groups or face suspension from the OECD. Turkey and Indonesia are the only members of the 36-member organization that haven’t passed terror-financing legislation, Ergin said, and suspension may impede transactions with Western banks.

“If the Parliament approves the bill, we think that the most important short-term risk factor will be eliminated,” BGC Partners chief economist Ozgur Altug said in e-mailed report today from Istanbul.

Before it's here, it's on the Bloomberg Terminal.