Introduction
Economic relations between Dubai (United Arab Emirates – UAE) and Turkey are growing steadily.
When companies established in Dubai want to invest in Turkey or individual investors wish to transfer capital to Turkey, this triggers specific reporting and compliance obligations under MASAK (Financial Crimes Investigation Board) and Turkish banking regulations.
This article outlines the MASAK monitoring rules, banking procedures, and legal requirements for capital transfers from Dubai to Turkey.
1. Legal Framework
1.1 Turkish Legislation
- Law No. 5549 on the Prevention of Laundering Proceeds of Crime
(MASAK Law) - MASAK General Communiqués (Serial Nos: 5, 13, 19, etc.)
- Decree No. 32 on the Protection of the Value of Turkish Currency
(Capital transfers from abroad and foreign exchange transactions) - Banking Law No. 5411
(Bank reporting and Know Your Customer – KYC obligations)
1.2 Dubai and UAE Legislation
- UAE Central Bank Regulations (Outbound capital reporting requirements)
- Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) Law
2. MASAK Obligations
2.1 Know Your Customer (KYC)
- Under Law No. 5549, Turkish banks must verify the identity of the sender and recipient for high-value inbound transfers from abroad.
- For corporate capital transfers, commercial registry records and shareholding structure are required.
2.2 Suspicious Transaction Reporting (STR)
- If the purpose of the transfer, the legal relationship between the parties, or the amount cannot be supported with a reasonable explanation, the bank must file a Suspicious Transaction Report to MASAK.
- This report is confidential and not disclosed to the customer.
2.3 Reporting Thresholds
- All international money transfers of TRY 75,000 and above must be reported to MASAK electronically.
- Transfers below this amount may also be reported if deemed suspicious.
3. Banking Procedures
3.1 Pre-Transfer Preparation
- The recipient bank IBAN and SWIFT code must be entered correctly when sending from the Dubai bank.
- The transfer description should include clear terms such as “capital transfer” or “for investment purposes”.
3.2 Required Documentation
Turkish banks generally require:
- Copy of the sender’s ID/passport
- For corporate capital: commercial registry gazette and shareholders list
- Documents showing the source of funds (invoice, contract, investment decision, etc.)
3.3 Investor-Friendly Procedures
- Capital transfers are permitted under Decree No. 32 as part of authorized foreign exchange inflows.
- The capital amount must be reported to the Central Bank of Turkey during capital increases or company incorporation.
4. Tax and Financial Aspects
- Capital transfers are not subject to income or corporate tax; however, dividend distributions are taxable.
- Investors can benefit from the Double Taxation Avoidance Agreement (DTAA) between Turkey and the UAE for future profit repatriations.
5. Practical Considerations
- Avoid over-declaring the transfer amount and then partially refunding it, as this may raise MASAK concerns.
- Whenever possible, transfer the full capital amount in one documented transaction rather than in multiple smaller transfers.
- Communicate with the bank in writing before the transfer to clarify required documentation.
- Cash-intensive or undocumented transfers may trigger MASAK scrutiny.
6. Court of Cassation and Practice Examples
- Turkish Court of Cassation, 11th Civil Chamber, 2017/4421 E., 2019/1536 K.: Stated that the source of funds in capital transfers must be documented; otherwise, the funds may be returned, and legal disputes may arise.
- MASAK classifies foreign investment transfers as “high-risk transactions,” subject to stricter examination.
Conclusion
Capital transfers from Dubai to Turkey must strictly comply with MASAK obligations and banking procedures.
If the source, purpose, and parties to the transaction are properly documented, the process can be completed smoothly with both MASAK and the bank.
For large-scale investments, it is advisable to work with a lawyer experienced in international finance and banking law
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