Enforcement of prudential standards in Turkish banking law

Abstract

Purpose

The success of banking regulations depends on their effective and efficient enforcement. Therefore, the penalties or sanctions for failures to comply with prudential regulatory requirements shall clearly be specified in the law. The aim of this paper is to describe and discuss the enforcement of prudential regulations in Turkish banking law.

Design/methodology/approach

The paper explains the necessity of the prudential standards in banking regulation and their enforcement, and elaborates the Turkish Banking Act to analyze the sanctions provided for the enforcement of prudential requirements.

Findings

The Turkish Banking Act comprises many of the contemporary prudential standards for banks. It also establishes an effective sanctioning regime to ensure the implementation of these standards. The sanctions in the Banking Act can be broadly classified as institutional and personal sanctions. Institutional sanctions consist of three categories: prompt corrective actions, revocation of license and closure, and financial penalties. Personal sanctions, on the other hand, comprise management overhaul and loss of job, temporary prohibition from employment in the banking sector, financial penalties, criminal liability, and civil liability of managers and controlling shareholders.

Originality/value

This paper systematically analyzes enforcement of prudential standards in Turkish banking law, and aims to introduce the Turkish system to international scholars.

Citation

Cetin, N. (2011), "Enforcement of prudential standards in Turkish banking law", Journal of Money Laundering Control, Vol. 14 No. 3, pp. 254-265. https://doi.org/10.1108/13685201111147559