Turkey has been removed from an anti-money laundering watchdog’s so-called gray list, a move likely to boost the nation’s efforts to attract foreign capital.

The Paris-based Financial Action Task Force said Friday that Turkey is no longer on the list of countries subject to increased monitoring after improving its mechanisms for tackling money laundering and terrorist financing. Bloomberg News reported in May that the FATF had seen significant progress in the country’s attempts at curbing illicit money flows following an on-site visit.

Jamaica has also been removed from the “gray list” thanks to its “significant progress” on compliance. The nation was added to the list in 2020.

The FATF said Turkey addressed deficiencies by “applying dissuasive sanctions” for anti-money laundering and terrorism financing breaches and “undertaking more complex money laundering investigations and prosecution,” among other steps.

The decision will have a positive impact on Turkey’s borrowing costs, vice president Cevdet Yilmaz told Bloomberg. A pick up in the pace of foreign capital to the nation and a subsequent interest in Turkish lira assets will also “fasten the disinflation process,” he said.

Since the general elections last year, Turkey has been striving to reinstate orthodox economic policies and position itself as a favourable investment destination. The exclusion from the “gray list” could help lure capital into its US$1.1 trillion economy. A 2021 International Monetary Fund report found that gray-listed countries experienced “a large and statistically significant reduction in capital inflows.”

Turkey was added to the FATF’s list of jurisdictions under increased monitoring in October 2021 due to supervision lapses in sectors such as banking, gold and precious stones dealing, and real estate.

The FATF was founded more than three decades ago at the initiative of the G7, with members including the US and China. It’s a standard-setting body that aims to prevent money laundering and terrorist financing.

  - Bloomberg