The role of virtual asset service providers in money laundering : a comparative analysis of regulatory frameworks in Turkey and the EU

Abstract

The rise of crypto-assets has transformed the global financial landscape, creating both opportunities for innovation and risks to financial integrity. As exchanges, custodians, and other intermediaries emerged to facilitate the trading, storage, and transfer of these assets, regulators confronted the challenge of extending anti-money laundering and counter-terrorist financing frameworks to an industry defined by anonymity, borderless transactions, and rapid technological change. This dissertation will examine the legal regimes that govern CASPs in their role as intermediaries within the crypto-asset ecosystem. The European Union operationalized these standards through successive directives and, more recently, through directly applicable regulations such as the Markets in Crypto-Assets Regulation and the Transfer of Funds Regulation. Türkiye, under pressure from its FATF grey-listing, incorporated CASPs into its AML legislation, strengthened sanctions compliance, and ultimately embedded them within capital markets law, backed by detailed MASAK notices and Capital Markets Board Regulations. After comprehensively evaluating the legal frameworks any gaps or shortcomings will be addressed and their potential impact and real world applications will be provided. One of which is the current exclusion of decentralized exchanges which if stays unregulated could have catastrophic adverse effects just as the previous FTX crisis.