Regulation on Principles and Procedures for Monitoring Transactions Affecting Foreign Currency Position by the Central Bank of Turkey

The Regulation on Procedures and Principles for Monitoring Transactions Affecting Foreign Currency Position by the Central Bank of Republic of Turkey (“Regulation”) (in Turkish, “Döviz Pozisyonunu Etkileyen İşlemlerin Türkiye Cumhuriyeti Merkez Bankası Tarafından İzlenmesine İlişkin Usul ve Esaslar Hakkında Yönetmelik”) came into effect upon being published in the Official Gazette dated 17 February 2018.

As per the said Regulation; the companies having USD 15,000,000 (fifteen million American Dollar) or more as the total of their foreign currency loans and foreign exchange loans (in Turkish, “yabancı para nakdi krediler ve dövize endeksli krediler toplamı”) on the last business day of the relevant accounting period should report various required data to the Central Bank of Republic of Turkey (“Central Bank”).

If the amount later falls below USD 15,000,000, the disclosure obligation of the company ceases.

Loan calculations shall be made according to the foreign exchange buying rates to be published in the Official Gazette on the last business day of the relevant accounting period.

Besides the disclosure obligation, the companies which are obliged to make disclosures to the Central Bank should also appoint an independent auditor within 60 days as of the day the obligation arises. The company must identify the auditor to the Central Bank and also upload a copy of the engagement agreement to the system.

The management of the company will be held responsible for the accuracy and completeness of the data disclosed to the Central Bank.

Disclosure Procedure:

• Data prepared by the Company in accordance with the financial reporting shall be notified to the Central Bank by using data form.
• The notification shall be made as per the information format in the system.
• The notifications shall be made as per the financial reporting until the end of the month following the interim accounting periods ending on March 31st, June 30th and September 30th; and within 3 months following the annual accounting period ending on December 31st.

Systematic Risk Data Tracking System:

• As per the Regulation, the Central Bank shall establish a Systematic Risk Data Tracking System.
• The Central Bank shall cross check the data to be provided by the Company.
• The users of the system shall be the Central Bank, companies and auditors.
• The auditor shall control the data to be entered to the system by the company.
• The auditor shall request from the company through the System to correct the errors of the disclosed data. The company should load to the system the corrected data within five business days.

If the obligation of disclosure is not fulfilled fully or is fulfilled inaccurately or if the necessary corrections are not made, the sanctions provided in article 68 of the Code of Turkish Republic Central Bank (in Turkish, “Türkiye Cumhuriyeti Merkez Bankası Kanunu”) may be applied against the relevant parties.

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