Algeria – Know Your Customer (KYC) Rules

 

 

The extent of money laundering through formal financial institutions in Algeria is thought to be minimal due to stringent exchange control regulations, a large segment of the economy that is cash-based, and an antiquated banking sector dominated by public banks. The restricted convertibility of the Algerian dinar enables the Central Bank to monitor all international financial operations carried out by public and private banking institutions. Notable criminal activity includes trafficking, particularly of drugs and cigarettes, but also arms and stolen vehicles; kidnapping for ransom (KFR); theft; extortion; and embezzlement. Public corruption remains a serious concern as does terrorism. Algerian authorities are increasingly concerned by cases of customs fraud and trade-based money laundering. Other risk areas for financial crimes include unregulated alternative remittance and currency exchange systems, tax evasion, abuse of real estate transactions, commercial invoice fraud, and a cash-based economy. Most money laundering is believed to occur primarily outside the formal financial system, given the large percentage of financial transactions occurring in the informal gray and black economies in general. Al-Qaida in the Islamic Maghreb, which originated in Algeria, is currently confined to outlying areas but has a history of terrorist activity in Algiers and elsewhere in the country, including suicide attacks, KFR, roadside bomb attacks, and assassinations.

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KNOW-YOUR-CUSTOMER (KYC) RULES:

 

Enhanced due diligence procedures for PEPs:

 

PEP is an abbreviation for Politically Exposed Person, a term that describes a person who has been entrusted with a prominent public function, or an individual who is closely related to such a person. The terms PEP, Politically Exposed Person and Senior Foreign Political Figure are often used interchangeably

    • Foreign PEP: YES
    • Domestic PEP: NO

Algeria – KYC covered entities

 

The following is a list of Know Your Customer entities covered by Algerian Law:

 

    • Banks
    • Financial leasing institutions
    • Investment and shareholding companies

Algeria – Suspicious Transaction Reporting (STR) Requirements:

Number of STRs received and time frame:  1,373 in 2012

The following is a list of STR covered entities covered by Algerian Law:

    • Banks
    • Financial leasing institutions
    • Investment and shareholding companies
    • Real estate agents
    • Car dealers
    • Other financial professionals who advise or carry out transactions, such as deposits, exchanges, or other movements of capital

Algeria is a member of the Middle East and North Africa Financial Action Task Force (MENAFATF), a Financial Action Task Force-style regional body.

ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS:

In 2012, the Government of Algeria (GOA) implemented a package of policies intended to diminish the informal sector, motivate Algerian business people to formalize their activities, and generate revenue for the central government. A new law enacted in February 2012 extends the scope of KYC obligations to all financial institutions and expands the list of professionals who must report suspicious activity to include real estate agents, car dealers, and financial professionals who advise or carry out transactions, such as deposits, exchanges, and other movement of capital. The law also gives the GOA the authority to freeze and/or seize assets belonging to or destined for terrorists or a terrorist organization for a renewable one-month period. However, the administrative processes associated with this new authority remain unclear, while the corresponding judiciary processes appear not to conform to international standards. The GOA should move forward with the implementation of these laws, issue implementing regulations where required, and continue to work to address the remaining deficiencies in its anti-money laundering/counter-terrorist financing regime.

Specifically, the GOA should take significant legislative action to criminalize the financing of terrorism for any purpose, i.e., regardless of a link to the planning or commission of a terrorist act, and to establish a formal legal framework to implement the targeted financial sanctions included in UNSCRs 1267 and 1373. According to the director of the Algerian Financial Intelligence Cell (CTRF), the financial intelligence unit, the GOA is in the process of developing legislation that would criminalize terrorist finance even where unconnected to a terrorist act. This legislation was delayed by the Algerian President’s medical crisis.

The CTRF should be the focal point for receiving and analyzing suspicious activity reports, and for the exchange of information regarding suspicious transactions related to money laundering/terrorist financing activity. This will require the CTRF to develop in-house analytical and information technology capabilities. The CTRF should continue outreach to the formal and informal financial sectors. In addition, given the scope of Algeria’s informal economy, new efforts should be made to identify value transfer mechanisms not covered by Algeria’s legal and regulatory framework. Algerian law enforcement and customs authorities should enhance their ability to investigate trade-based money laundering, value transfer, and bulk cash smuggling used to finance terrorism and other illicit activities.