Turkey's gold banking facilitated money laundering

Article Summary
Turkey has embraced gold banking as a means of paying Iran for oil in light of international sanctions, but this new form of banking has made money laundering much easier.

Paying Iran gold for its natural gas is behind the scandal we are living through nowadays. We have been paying Iran with gold because of the embargo it is under. Anyway, converting gold to foreign currency is impossible without some process of money laundering. We also got the Central Bank into the system and under the slogan “getting the gold under the mattresses into the economy” created an economic system that facilitated money laundering through the widespread use of gold.

Look at what I wrote in my Nov. 6, 2012, article in Milliyet with the headline “Is the gold system that has been created facilitating money laundering?” Our Central Bank began accepting part of the “obligatory reserves” of banks in gold. Banks that were not paying interest on gold accounts began amassing gold and fulfilling their obligations to the Central Bank with gold.

This of course boosted the banks’ profitability. Banks opened "gold account" projects to collect scrap gold. Some banks began specializing in “physical gold delivery."

Among the bank clients opening gold accounts are also traders working with gold and foreigners. Clients are allowed to open a gold account, have their scrap gold refined and then withdraw the gold. Banks do not ask about the origin of the gold brought to them.

Laundering black money means injecting illegal funds into the banking system. Money that is entered into the accounts of a bank can then easily be moved around between banks and thus laundered. For example, when someone buys gold with cash dollars made from smuggling and opens a gold bank account, laundering of those illegal funds is easy. Then the amount in the gold account is converted into foreign currency account and transferred to any place in the world.

Our Central Bank responded to my articles and said, "The gold is kept at the Central Bank and transferred from here. When it is shipped from the Central Bank, foreign banks accept it. With a decision of the Council of Ministers on March 10, 2009, trading in local currencies is allowed. At the moment payments for foreign trade with Iran is made through Halkbank. Exports to Iran are done only by the private sector. The Turkish Central Bank is definitely not involved in gold exports and shipments. Turkish Central Bank does not make payments in Turkish lira."

As can be seen, the multifaceted system is wide open to abuse.

Found in: turkish economy, turkey, sanctions on iran, iran sanctions, iran, economy

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