(Dec. 9, 2019) On November 22, 2019, the Grand National Assembly of Turkey passed Law No. 7192 (the amending law), which brought changes to Law No. 6493 on Payment and Security Settlement Systems, Payment Services and Electronic Money Institutions. Significantly, the Law includes an amendment transferring the authority to regulate and supervise payment services from the Banking Regulation and Supervision Agency (BDDK) to the Central Bank of Turkey. Article 12 of the amending law (article 21 of Law No. 6493 as amended) updates the framework for the Central Bank’s supervision of payment system providers. In the parliamentary debates, members of parliament (MPs) supporting the bill stated that Law No. 6493 was created in accordance with the European Union acquis in the area set by Directive 98/26/EC (“on settlement finality in payment and securities settlement systems”), Directive 2009/110/EC (“E-money Directive”), and Directive 2007/64/EC (“Payment Services Directive 1 (repealed)), and that the amending law sought to harmonize Turkish legislation with the current acquis by implementing certain changes brought to the acquis under Directive 2015/2366/EU.
The amending law updates the definition of “payment” to cover new types of electronic payment services. It also sets up the “Union of Payment and Electronic Money Institutions of Turkey,” a public industry organization that licensed payment service institutions and electronic money institutions must join within one month of acquiring legal personality. (Law No. 6493 supplementary art. 1.) The amending law makes the organization responsible for setting industry standards and guidelines and establishing an arbitration board for resolving disputes.
Additionally, the amending law amends article 8 of Law No. 6493 to grant the Central Bank the authority to become a shareholder in institutions administering payment and securities settlement systems that have “systemic importance … for the purposes of ensuring the uninterrupted operation of the systems.” This amendment was particularly criticized in the parliamentary debates on the bill by MPs who argued that certain private companies in which the Central Bank is part owner could be unduly favored by the Central Bank, despite the reassurances of the bill’s sponsors that “systemic importance” (a term that opponents of the bill found ambiguous) denotes a very high level of importance for the healthy functioning of the financial system that no single institution currently possesses so as to trigger the operation of the provision. Critics of the bill in parliament dismissed the reassurances as being disingenuous, also arguing that the Central Bank’s reputation would be damaged if it participated in private companies, while the bill’s supporters maintained that the Central Bank becoming a shareholder in a settlement institution was not extraordinary, given that it was technically a commercial entity and that it was already a shareholder in international systems such as SWIFT. Some MPs also criticized the amending law for not providing a framework whereby the Central Bank could take precautionary measures in response to future developments in the proliferation and use of cryptocurrencies.