Serdar Paksoy Shared Insights In The Anti-Corruption Report Interview

Navigating Corruption Risks in Turkey

Turkey is an attractive market for foreign investors with a population of 85 million people, a geostrategic location straddling Europe and Asia, and a GDP exceeding $1 trillion. But Turkey's anti-corruption track record raises concerns among international observers.
In Transparency International's 2024 Corruption Perceptions Index Transparency International, Turkey stood at its lowest score of 34, having been in decline since its peak of 50 in 2013. Additionally, the OECD issued a Report in June 2024 (Phase 4 Report), summing up its fourth phase of monitoring Turkey's adoption of OECD anti-bribery norms. It found significant gaps remaining in investigating and prosecuting bribery as well as in judiciary and prosecutorial independence.
Turkey lacks a single, all-embracing anti-corruption law; instead, relevant provisions are spread across multiple statutes and regulations. It also lacks a unified, independent anti-corruption agency. Those doing business locally are aware of an informal economy that thrives on unofficial billing known as "naylon faturacılık," or "nylon invoicing," which can attract serious penalties.
The Anti-Corruption Report spoke with Serdar Paksoy, founding and senior partner at independent Turkish law firm Paksoy, about the country's anti-corruption laws, enforcement and related risks for foreign companies.
See "How Companies Can Protect Themselves From Secondary Sanctions Liability" (Dec. 4, 2024).

A Patchwork of Anti-Corruption Laws

What is the current legal landscape in Turkey regarding corruption?

Serdar Paksoy: Turkey's anti-corruption legal framework is comprehensive in scope. It is principally governed by the Turkish Criminal Code, Law Number 5237, which criminalizes bribery, including bribery of foreign public officials, as well as embezzlement, abuse of office, abuse of trust and money laundering.
Additional statutes complement Law 5237. Law Number 3628 on Declaration of Property and Combating Bribery and Corruption requires public officials to make asset disclosures. Law Number 5176 on the Ethics Board for Public Officials establishes ethical standards and oversight mechanisms.
Additional regulations address public procurement, financial sector compliance and AML obligations, notably through Law Number 5549 on the Prevention of Laundering Proceeds of Crime.
Turkey is a party to key international conventions, including the OECD's Anti-Bribery Convention and the United Nations' Convention Against Corruption.

So it seems that Turkey does not have a single bribery statute so much as a series of interconnected laws that touch on bribery. Does that create any issues?

Serdar Paksoy: While this approach covers a broad range of conduct and actors, it can lead to ambiguity, enforcement gaps and administrative complexity, particularly in areas such as corporate criminal liability and whistleblower protection.

How likely is it that the legislature will pass a general anti-corruption law and the administration will support it?

Serdar Paksoy: International bodies such as the OECD and the E.U. have repeatedly recommended adopting a comprehensive anti-corruption law and a national strategy. However, the OECD notes that most recommendations from earlier phases remain outstanding. There is no imminent legislative proposal for a single, consolidated anti-corruption statute.

Decentralized Enforcement

How effective is enforcement of Turkey's anti-corruption laws?

Serdar Paksoy: Practical enforcement remains a challenge. The OECD Phase 4 Report highlights significant gaps, particularly in the investigation and prosecution of foreign bribery, the independence of the judiciary and prosecutorial authorities, and the implementation of whistleblower protections.

Which authorities enforce anti-corruption statutes in Turkey?

Serdar Paksoy: Enforcement of anti-corruption statutes in Turkey is shared among several bodies.
The Public Prosecutor's Offices and criminal courts are primarily responsible for investigating and prosecuting criminal offenses under the Criminal Code.
Supporting authorities include the Financial Crimes Investigation Board, or MASAK, for AML enforcement; the Ethics Board for Public Officials and the Court of Accounts for auditing public expenditures; and the Public Procurement Authority for public tenders.
Sectoral regulators, such as the Banking Regulation and Supervision Agency, the Capital Markets Board and the Energy Market Regulatory Authority, also play roles, depending on the industry and context.

What have international observers said about the non-centralized enforcement structure?

Serdar Paksoy: The OECD Phase 4 Report underscores that, although the structure is comprehensive, it lacks autonomy and centralization, which can impact the effectiveness and impartiality of enforcement.
International reviews, including ones by the OECD and Council of Europe's Group of States against Corruption (GRECO), have flagged the lack of institutional independence as a key impediment to robust and impartial enforcement. The absence of a unified, independent anti-corruption agency means that enforcement can be subject to executive influence and lacks coordination and focus.
The Ethics Board for Public Officials and the Public Procurement Authority operate within the administrative framework and are not insulated from broader government influence.

What alternative recommendations has Turkey received?

Serdar Paksoy: The OECD recommends establishing a permanent and independent anti-corruption body because existing institutions lack genuine autonomy.

How has anti-corruption enforcement shifted since Recep Tayyip Erdoğan became president in 2014?

Serdar Paksoy: During President Erdoğan's tenure, Turkey has enacted several legislative reforms to align with international anti-corruption standards, including amendments to the Criminal Code and enhancements to AML regulations. However, both the OECD and GRECO have observed that practical enforcement has not kept pace with these legal developments. While the legal framework is comprehensive, there is a significant gap when it comes to practical effectiveness.

How has the independence of the judiciary developed under the current administration?

Serdar Paksoy: Reforms after 2016, particularly changes to the Council of Judges and Prosecutors, have further centralized executive influence over the judiciary.
[See "World Bank Settlement Debars Selçuk Yorgancıoğlu With Integrity Compliance Conditions" (May 10, 2023).]

Where to Look for Risks

Where do multinational companies doing business in Turkey face the greatest bribery and corruption risks?

Serdar Paksoy: Multinational companies in Turkey are most likely to encounter bribery and corruption in areas with extensive interaction with public officials or state-controlled entities. These include public procurement and government contracting, customs and import/export operations, and infrastructure and construction projects.

Which industries are particularly risky in Turkey?

Serdar Paksoy: Energy, pharmaceuticals, healthcare, telecommunications and defense are the riskiest industries in Turkey for multinationals. The OECD Phase 4 Report identifies the defense and construction sectors as high-risk areas because of the significant presence of Turkish companies in jurisdictions with high corruption risk and the complexity of licensing and approval processes.

What geographic areas have particularly high bribery and corruption risk?

Serdar Paksoy: Urban centers like Istanbul, Ankara and İzmir, where large-scale projects and government contracts are concentrated, are typically areas of heightened risk.
Regional disparities and variations in local governance can result in increased exposure in some provincial and rural areas. Regulatory oversight may be less robust there, and local authorities may have significant discretionary power.
[See "Central Asia Steers Around Sanctioned Neighbors While Honing Corruption Rules" (Apr. 24, 2024).]

"Nylon" Invoicing

What is "naylon faturacılık," or "nylon invoicing"?

Serdar Paksoy: "Naylon faturacılık," or "nylon invoicing," means issuing fake, fictitious or fraudulent invoices for goods or services that were never supplied or performed. The primary purposes are to create false expenses, reduce taxable income, facilitate unrecorded payments including bribes or kickbacks, or launder illicit funds. Under Turkish law, both the issuance and use of fraudulent invoices are criminal offenses. They are closely monitored by tax authorities and financial crime enforcement bodies.

What should multinationals doing business in Turkey know about the risks of nylon invoicing?

Serdar Paksoy: Multinationals should be aware that involvement in nylon invoicing, even indirectly, can result in severe administrative penalties, tax reassessments, exclusion from public procurement and criminal prosecution. Turkish authorities, particularly the Revenue Administration and MASAK, have increased their enforcement efforts. They employ digital audit tools to detect fraudulent invoicing schemes.

How can multinationals doing business in Turkey mitigate the risks of nylon invoicing?

Serdar Paksoy: Companies should implement robust internal controls over procurement, accounting and financial reporting. This includes thorough due diligence on all vendors and third parties, verification of the legitimacy and business substance of transactions, and cross-checking invoice details with the actual deliveries and services.
Essential components of an effective risk mitigation strategy include regular audits, digital accounting and tax compliance systems, employee training on fraud and anti-bribery awareness, and clear whistleblowing channels.

Money Laundering Risks

The Financial Action Task Force (FATF), the Paris-based intergovernmental organization focused on anti-money laundering and countering the financing of terrorism (AML/CFT), removed Turkey from its "grey list.". What was the reasoning behind the removal?

Serdar Paksoy: Turkey was placed on the FATF grey list in October 2021 due to strategic deficiencies in its AML/CFT regime, particularly regarding supervision of non-financial entities and beneficial ownership transparency. However, following substantial reforms – including more robust supervision by MASAK, improved sanctioning for AML breaches and expanded AML investigations – Turkey was officially removed from the grey list in June 2024.

How much of a risk does money laundering remain in Turkey?

Serdar Paksoy: Despite improvements, money laundering remains a compliance and reputational risk, given Turkey's large financial system, strategic geographic position and active cross-border trade. Sectors with high cashflows or regulatory complexity are especially vulnerable. Examples are banking, real estate, trading in high-value goods and professional services.

What can companies do to mitigate AML risk?

Serdar Paksoy: Companies should implement comprehensive AML compliance programs that include robust customer due diligence, enhanced beneficial ownership verification, ongoing transaction monitoring and timely reporting of suspicious transactions. Regular staff training, periodic compliance reviews and due diligence on third parties are also recommended.
[See "How Money Laundering Allegations Turn Foreign Violations Into Domestic Cases" (Mar. 26, 2025).]

Local Compliance Culture

How aware of anti-bribery and anti-corruption compliance measures are Turkish businesses?

Serdar Paksoy: Awareness of anti-bribery and anti-corruption compliance has grown in recent years, particularly among larger corporations, publicly traded companies and subsidiaries of multinational enterprises. Many such organizations have adopted compliance programs influenced by international standards or requirements imposed by foreign business partners.
The level of awareness and implementation among small and medium-sized enterprises is considerably lower.

What local compliance resources are available in Turkey?

Serdar Paksoy: Industry associations, chambers of commerce and professional advisors are increasingly providing guidance, but a compliance culture is still developing, particularly outside highly regulated sectors. The OECD Phase 4 Report notes that Turkish authorities have not sufficiently promoted anti-corruption compliance programs, especially among small and medium-sized enterprises and companies operating in high-risk sectors.

Are there any requirements for compliance programs under Turkish law?

Serdar Paksoy: Turkish law does not impose a general obligation for companies to establish anti-bribery or anti-corruption compliance programs. In the broader corporate sector, compliance programs are considered best practice rather than a legal obligation.

Do special compliance program requirements exist for some businesses?

Serdar Paksoy: They exist in specific regulated sectors. For example, banks, insurance companies and portfolio management firms are required by Law Number 5549 and MASAK regulations to implement internal controls, risk management systems, compliance units and employee training for AML/CTF purposes.
["Lessons in Cultural Assessment From an Internationally Expanding Company" (Oct. 8, 2025).]

Whistleblowing

Are there any Turkish laws around whistleblowing?

Serdar Paksoy: There is currently no comprehensive whistleblower protection law in force. Broader legislative reform is needed to provide effective legal remedies and encourage reporting.

What is the culture around speaking up and whistleblowing?

Serdar Paksoy: The culture around speaking up and whistleblowing in Turkey is evolving but faces significant challenges. Some sectoral or internal company policies may encourage reporting. However, concerns about retaliation, confidentiality and lack of legal safeguards remain substantial barriers. As a result, whistleblowing has not played a significant role in detecting or investigating foreign bribery cases in Turkey.
["Insights From Whistleblowers on How to Foster a Speak Up Culture" (Oct. 22, 2025).]

The Effects of Shifting FCPA Enforcement

Recent guidance from the DOJ, including the June 2025 memorandum from Deputy AG Todd Blanche, has narrowed FCPA enforcement priorities to focus on cases involving cartels, transnational criminal organizations (TCOs) and foreign terrorist organizations (FTOs). How might this narrowing impact Turkey, if at all?

Serdar Paksoy: I don't think there will be too much of an impact because this shift in priorities does not alter the underlying legal obligations of the FCPA or eliminate the risk of enforcement. The FCPA remains fully in force, and enforcement priorities can shift rapidly with changes in U.S. administration or DOJ policy.

How likely are multinational companies to come into contact with TCOs or FTOs in Turkey? In what contexts?

Serdar Paksoy: Turkey's geographic position as a regional hub for trade and its proximity to areas of geopolitical instability mean that there is some risk of encountering TCOs or FTOs, particularly in sectors such as logistics, shipping, energy and cross-border trade. Companies operating in border regions, transit-heavy industries or sectors with complex supply chains may be at higher risk.

How can companies limit such exposure?

Serdar Paksoy: Multinationals should deploy enhanced due diligence protocols, especially when engaging in higher-risk sectors or with counterparties in sensitive regions. This includes comprehensive supply chain mapping, critical assessment of third-party relationships, and monitoring for unusual transactional patterns or unexplained payments. Rigorous internal controls, transparent and accurate recordkeeping, regular training on FCPA and anti-corruption obligations, and robust whistleblower mechanisms are also essential.

Another focus for the DOJ is sanctions and export controls. What should multinational companies know about possible violation of sanctions or export controls related to countries in the region?

Serdar Paksoy: Turkey's strategic location and active international trade can expose them to U.S., U.K., E.U., and other sanctions regimes or export control restrictions. This is particularly relevant in dealings with countries or entities subject to international sanctions, as well as in sectors such as defense, dual-use goods and high-technology exports.

How can businesses address those risks?

Serdar Paksoy: Companies must implement robust compliance programs to screen transactions, business partners and end users against relevant sanctions lists and export control regulations. Violations can result in significant legal, financial and reputational consequences, including enforcement actions by foreign authorities.
It is essential to conduct thorough due diligence, maintain up-to-date compliance policies and seek specialist legal advice to ensure adherence to all applicable sanctions and export control requirements.
[See "How Designating TCOs As Terrorist Organizations Creates Risks for Financial Institutions and Beyond" (May 21, 2025).]

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