TÜRKÇE
  Updated: 04/06/2018

Chapter 4- Free Movement of Capital

Content of the Chapter

Free Movement of Capital owns a crucial position for founding an open, integrated, competitive and effective financial market and financial service structure throughout Europe by removing restrictions on capital movement both within the EU and between Member States and third countries.

The Chapter 4 titled “Capital and Payments” of the Title 4 called “Free Movement of Persons, Service and Capital” of the Treaty on the Functioning of the European Union (TFEU) sets out the provisions with regard to capital and payments. It is stated in Article 63 of the TFEU that all restrictions on the movement of capital between Member States and between Member States and third countries shall be prohibited. Although the basic principle in the field of capital movements and payments is the prohibition of restrictions implemented especially in a direct discriminatory manner based on nationality, these restrictions may only be justified with the justifications set down in the Treaty.

Pursuant to Article 65 of the TFEU, the provisions of Article 63 shall be without prejudice to the right of Member States:

  • to apply the relevant provisions of their tax law which distinguish between taxpayers who are not in the same situation with regard to their place of residence or with regard to the place where their capital is invested;
  • to take all requisite measures to prevent infringements of national law and regulations, in particular in the field of taxation and the prudential supervision of financial institutions,
  • to lay down procedures for the declaration of capital movements for purposes of administrative or statistical information
  • to take measures which are justified on grounds of public policy or public security.

However these measures shall not constitute a means of arbitrary discrimination or a disguised restriction on the free movement of capital and payments.

In this framework, the exceptions on free movement of capital are generally implemented in the area of taxation, prudential control, prevention of money laundering, public policy priorities and sanctions that are defined in accordance with common foreign and security policy.

The Chapter 4 on Free Movement on Capital covers three areas: a) Capital movements and payments b) Payment systems c) Fight against money laundering.

In the field of capital movements, capital is defined as financial operations aiming investment and gaining profit. The definition of different types of capital movements is set down by the Annex I of repealed Directive 88/361/EEC. The operations defined as capital movements are as follows:

  • Direct Investments
  • Investments in Real Estate
  • Operations in Securities Dealt in on the Capital Markets
  • Operations in Securities and Other Instruments Dealt in on the Money Market
  • Operations in Current and Deposit Accounts with Financial Institutions
  • Credits related to Commercial Transactions or to the Provision of Services in Which Resident is Participating
  • Financial Loans and Credits
  • Sureties, Other Guarantees and Rights of Pledge
  • Transfers in Performance of Insurance Contracts
  • Personal Capital Movements
  • Physical Import and Export of Financial Assets
  • Other Capital Movements

With regard to payment systems, the acquis covers the arrangements on payment and securities settlement systems, payment services and electronic money institutions.

In 2015 the EU adopted a new directive on payment services (PSD 2) to improve the existing rules and take new digital payment services into account. The directive became applicable in January 2018. The regulation (EC) No 924/2009 on charges for cross-border payments in euro was also adopted. It requires banks to apply the same charges for domestic and cross-border electronic payment transactions in euro.

In the field of fight against money laundering, by including also the provisions on combatting financing of terrorism, it is aimed to prevent the use of financial system by criminals for the purpose of money laundering and terrorist financing. To this end, financial institutions especially banks and non-financial entities are subject to obligations such as applying customer due diligence, making risk assessment and reporting suspicious transactions to the Financial Intelligence Units.

Directive 2015/849 on anti-money laundering and combatting terrorist financing was adopted in 2015 and became applicable in June 2017.

Current Stage of the Negotiations on the Chapter

In line with the two opening benchmarks foreseen in the screening report of 14 February 2007, strategy and action plans were prepared by the relevant public institutions and submitted to the EU Commission. Upon this, four closing benchmarks are determined and the negotiations are launched on 19 December 2008. 

Closing Benchmark

1-With respect to capital movements and payments, Turkey makes significant progress in its legislative alignment with the acquis, as indicated in the Action Plan.

2- With respect to real estate acquisition by natural and legal persons of the EU Member States, Turkey presents an Action Plan including concrete measures and a timetable for the gradual liberalization of the acquisition of real estate by foreigners in line with the acquis. 

3- With respect to anti-money laundering, including confiscation, Turkey advances its legislative alignment with the acquis, as well as with the recommendations of the Financial Action Task Force.

4-Turkey demonstrates through a track record that it has at its disposal an adequate administrative capacity to properly implement and enforce the relevant legislation in all areas related to anti-money laundering including confiscation.

Relevant Subcommittee Meetings

Subcommittee No 4 on Economic and Monetary Issues, Capital Movements and Statistics

Subcommittee N° 8 on Customs, Tax, Drugs Trafficking and Anti-Money Laundering

Screening Process

Presentations at Explanatory Screening Meeting (25 November 2005)  

Presentations at Bilateral Screening Meeting (22 December 2005)

Screening Report

Useful Links

For more information on capital movements and payment systems in the EU:

https://ec.europa.eu/info/business-economy-euro/banking-and-finance/financial-markets/capital-movements_en

https://ec.europa.eu/info/business-economy-euro/banking-and-finance/enforcement-and-infringements-banking-and-finance-law/monitoring-free-movement-capital_en

https://ec.europa.eu/info/business-economy-euro/banking-and-finance/consumer-finance-and-payments/payment-services/payment-services_en

For more information on anti-money laundering and combating financing of terrorism in the EU:

https://ec.europa.eu/home-affairs/what-we-do/policies/organized-crime-and-human-trafficking/money-laundering_en

https://ec.europa.eu/home-affairs/what-we-do/policies/crisis-and-terrorism/financing_en


Updated: 04/06/2018 / Hit: 44,599