"Unsuitable country": how Turkey's entry into the euro payments zone will affect Russians

The European Union has offered Turkey to join the Single Euro Payments Area (SEPA). The proposal was made during an official visit to Ankara by EU Commissioner for Neighborhood and Enlargement Marta Kos in early February. How will the implementation of European banking standards in Turkey proceed if Ankara agrees, and how will it affect Russians?

What is SEPA and why is it important?

SEPA is a single payment standard that eliminates borders and complex rules for euro transfers. According to the ECB, the system unites 36 countries that have adopted a single standard for payment messages: the entire EU, Norway, Iceland, Switzerland and a number of other countries. Payments are made according to uniform rules, with minimal commissions and almost instantaneously.

The system architecture is built on three "whales". The first one is SEPA Credit Transfer (SCT) directly for transfers. The main feature is a single unified IBAN, i.e. bank details of different countries are brought under one form.

The second is SEPA Direct Debit (SDD) for direct debit. This is an add-on that makes payment from anywhere in Europe automatic: the user gives permission, and various entities - utilities, insurance companies or streaming services - debit the required amount from the account themselves.

And the third part of the smart payments system is SEPA Instant Credit Transfer (SCT Inst), which provides instant transfers 24/7 all year round.

Why is the EU calling Turkey to join its payment system and what does Russia have to do with it?

Ankara is consulting on joining the SEPA zone and has "itself requested information" about it in recent months, a European Commission official told Oninvest. Participation in SEPA "implies a high level of harmonization of national legislation with EU norms in areas such as payment services, banking, anti-money laundering, countering the financing of terrorism, etc.," the European Commission representative says. He emphasizes that the European Commission is also "in contact with the Turkish authorities to ensure that Turkey is not used to circumvent EU sanctions."

Turkey's integration into SEPA will strengthen monitoring at the level of banking infrastructure, and transactions with a Russian footprint will become more visible and vulnerable to scrutiny, explains Alexander Matveev, partner at law firm ANP ZENIT. According to him, SEPA is a powerful mechanism for real-time analytics. Financial flows are becoming comparable and verifiable, and hidden schemes to circumvent sanctions through Turkish jurisdiction can be destroyed not through direct bans, but through banking compliance mechanisms.

Why would Turkey do that?

The Turkish authorities have not yet responded to the proposal of the European Commission, the issue is being studied by the Ministry of Finance of the country. The Ministry and the Central Bank of Turkey did not respond to Oninvest's questions at the time of publication.

Turkey should be very interested in joining SEPA, says Ruslan Suleymanov, an orientalist and expert at the NEST Center. This will provide savings on transactions for the Turkish diaspora in Europe and exporting companies: cross-border payments in euros will become as fast and cheap as transfers within the EU. The number of Turkish diaspora in Europe exceeds 5 million people.

The idea of joining SEPA may also have opponents, as Turkish banks may lose part of the commission income from transfers. Reuters points out that now the commission of banks from transferring money from Turkey to Europe in the amount of 1,000 to 5,000 euros can reach 40 euros.

Russia is on the EU blacklist for money laundering. If Turkey joins the Europeans, will Turkish jurisdiction close for Russians?

"Blacklisting" imposes additional obligations on banks across Europe: enhanced control over financial transactions, increased requirements for customer due diligence and the possibility of denial of service for risky transactions. These rules may become mandatory for Turkish credit organizations as well.

However, experts interviewed by Oninvest agree that the scenario of "closing" the Turkish jurisdiction is unlikely to be instantaneous. Lenar Rakhmanov, Managing Partner of LWM-Istanbul, believes that Turkey will allow legitimate assets to operate in compliance with AML (anti-money laundering), despite the connection with Russia. Alexander Matveev also believes that "clean" assets will remain, but under increased control, while risky and "gray" assets will face delays and denials. Ruslan Suleymanov is confident that joining SEPA will not prevent Ankara from continuing to work with Russia, as many business transactions go through front companies and intermediaries.

Will the EU demand that Turkey fully synchronize its sanctions lists in exchange for participation in SEPA?

Formally, there may not be such a requirement, but practically it is inevitable, argues Alexander Matveev. "Any bank in SEPA operates under European rules and is obliged to comply with EU sanctions law. Even without a direct requirement, Turkey will be forced to de facto take into account the sanctions lists and equalize practices, otherwise its banks may face restrictions from European partners and lose access to correspondent accounts and payment infrastructure" .

Lenar Rakhmanov is of a similar opinion: European regulators will not require full synchronization of the sanctions lists, as Turkey is not joining the sanctions against Russia. But Turkey will need to strengthen its "anti-cleansing" standards in accordance with the EU directive.

How did the accession of other countries to SEPA turn out for Russians?

Natalia Smirnova, an independent financial advisor and investor, talks about the experience of Montenegro, which is working to synchronize its financial rules with the European Union in preparation for EU accession. When it became clear that Montenegro was going to SEPA schemes, banks stopped opening accounts for Russian citizens without European residence permits, stopped accepting rubles, and those who did accept them did not allow them to be transferred further. Banks in Montenegro increased compliance of sources of capital origin for clients with Russian passports, even with residence permits, she says. But the reason, she says, is largely because Montenegro is considered the most likely next member of the EU. Turkey has little chance of joining the EU (although it has been a candidate since 1999), so if it follows the same path as Montenegro, it will not be in such a harsh form, she says.

Ruslan Suleymanov agrees: "In Turkey, for example, the decisions of the European Council on Human Rights (ECHR) are not implemented. As long as Turkey ignores the decisions of EU bodies, this will be an obstacle to its full integration into the EU, including the banking system.

How can Turkey's accession to SERA affect Russians?

According to Smirnova, without a local or European residence permit/permit/passport, Turkey will not be a suitable country to open a bank account. If there is a Russian passport, residency, or the source of capital - the Russian Federation, it is better to look towards Kazakhstan or Armenia, she believes. Smirnova adds that Turkish banks already now sometimes refuse to transfer funds with Russian origin. For example, Deniz Bank introduced this practice even before Turkey's possible accession to SEPA.

Lenar Rakhmanov notes that banks will be obliged to track customers from the EU consolidated lists in real time. Nevertheless, he emphasizes an important detail: "SEPA is a parallel universe that exists alongside Turkey's existing cash flows". The expert gives the following example: if you, for example, are a re-locant-itishnik and receive rubles to Zolotaya Korona, then convert them into liras (RUB -> TRY), SEPA will most likely not affect you. But if euros appear in the chain, expect problems.

Most likely, these flows will not intersect for a long time, Rakhmanov says, but it is difficult to say how long - it could be six months after joining SEPA, it could be a year or more - it depends on the relations that will be formed between Turkey and Russia on the one hand, and between Turkey and the rest of the world on the other.

This article was AI-translated and verified by a human editor