TURKEY Law and Practice Contributed by: Sera Somay, Merve Kurdak and Doğa Pınarlı Dedebaş, Paksoy
accept deposits. Institutions are obliged to insure deposits and participation funds they hold with the Savings Deposit Insurance Fund. • Participation funds (Islamic finance): Participation accounts are accounts formed from funds depos - ited with participation banks, whereby the account holder participates in the profit or loss arising from the use of such funds. No predetermined return is paid to the account holder, and repayment of the principal is not guaranteed. Participation banks and participation funds are also subject to strict regulation and supervision of the BRSA. • Peer-to-peer funding: Peer-to-peer funding may be carried out through crowdfunding. Crowdfund - ing activities are regulated under the CML. Banks meeting the relevant conditions may operate as crowdfunding platforms. In debt-based crowdfund - ing, interest and similar returns on the debt instru - ments are determined by the entrepreneur. No crowdfunding activity may be conducted through agreements giving rise to a debtor–creditor rela - tionship (eg, loans), other than the sale of debt instruments, nor in exchange for any capital mar - kets instruments other than the debt instruments offered for sale. • Lending: In Türkye, various lending structures are utilised, including syndicated loans, bilateral loans and regulatory capital instruments (Tier 1 and Tier 2). Tier 1 and Tier 2 capital instruments are sub - ject to specific regulatory requirements governing subordination, early redemption options, dividend and interest payments, and circumstances requir - ing prior BRSA approval. • Capital markets instruments (bonds, securitisations and other debt offerings): These instruments are mainly regulated under the secondary legislation of the CMB. They are subject to the supervision of both the CMB and the BRSA and, where they qualify as regulatory capital, must comply with the relevant BRSA regulations. 4.4 Syndication of Fiat Currency Loans Syndicated loans are utilised in market practice and are not subject to a specific regulatory framework; accordingly, the general loan relationship regime applies. Such loans are typically governed by foreign law, most notably English law, although the borrower is a Turkish entity. However, the creation and enforce -
ment of security over assets located in Türkiye are generally subject to Turkish law. Syndicated loans are excluded from liquidity adequacy calculations if evi - dence of rollover at maturity is submitted to the BRSA at least 45 days prior to maturity. 5. Payment Processors 5.1 Payment Processors’ Use of Payment Rails Under Turkish legislation, payment processors may create or implement new payment rails only to the extent that the conditions set out under the Payment Services Law and applicable secondary legislation are duly satisfied. In order to create or implement a new payment rail, the relevant institution must qualify as a “system operator” and obtain an operation licence from the CBRT. Any payment rail other than the one(s) covered by the operation licence, as well as any structural change to an existing rail, requires prior CBRT approval. System operators may carry out activities outside the scope of system operation only if such activities are approved by the CBRT and expressly included within the scope of the operating licence. 5.2 Regulation of Cross-Border Payments and Remittances Payment transactions and remittances are classified as “payment services” under Turkish law and may therefore only be provided by payment and electronic money institutions licensed by the CBRT. Such ser - vices are regulated under the Payment Services Law and the related secondary regulations, as well as AML legislation. In addition, Turkish payment institutions may co-oper - ate with foreign payment or electronic money institu - tions that are duly authorised in their home jurisdic - tions and have also obtained the required approval from the CBRT to engage in such co-operation. Such co-operation is limited to cross-border payment ser - vices where at least one of the payer or the payee is located abroad, and the foreign entity may not present itself as independently providing payment services to customers in Türkiye.
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