ALGERIA
Summary

Sanctions

None

FAFT AML Deficient

No longer on list

Higher Risk Areas

 

US Dept of State Money Laundering assessment

Non - Compliance with FATF 40 + 9 Recommendations

Not on EU White list equivalent jurisdictions

Corruption Index (Transparency International & W.G.I.)

World Governance Indicators (Average Score)

Failed States Index (Political Issues)(Average Score)

Medium Risk Areas

Weakness in Government Legislation to combat Money Laundering

 

 

ANTI-MONEY LAUNDERING

 

FATF Status

Algeria is no longer on the FATF List of Countries that have been identified as having strategic AML deficiencies

 

Latest FATF Statement - 19 February 2016

The FATF welcomes Algeria’s significant progress in improving its AML/CFT regime and notes that Algeria has established the legal and regulatory framework to meet its commitments in its action plan regarding the strategic deficiencies that the FATF had identified in October 2011. Algeria is therefore no longer subject to the FATF’s monitoring process under its on-going global AML/CFT compliance process. Algeria will work with MENAFATF as it continues to address the full range of AML/CFT issues identified in its mutual evaluation report.

 

Compliance with FATF Recommendations

The last Mutual Evaluation Report relating to the implementation of anti-money laundering and counter-terrorist financing standards in Algeria was undertaken by the Financial Action Task Force (FATF) in 2011. According to that Evaluation, Algeria was deemed Compliant for 3 and Largely Compliant for 8 of the FATF 40 + 9 Recommendations. It was Partially Compliant or Non-Compliant for 5 of the 6 Core Recommendations.

 

US Department of State Money Laundering assessment (INCSR)

Algeria is categorised by the US State Department as a Country/Jurisdiction of Primary Concern in respect of Money Laundering and Financial Crimes.

OVERVIEW

 

Money laundering through Algeria’s formal financial system is minimal due to stringent exchange control regulations and a banking sector dominated by state-owned banks. Additionally, the continued prevalence of archaic paper-based systems and banking officials not trained to function in the current sophisticated international financial system has deterred money launderers who are more likely to use sophisticated transactions. A large informal, cash-based economy, estimated to be 30-50 percent of GDP, is vulnerable to abuse by criminals. Notable criminal activity includes trafficking, particularly of drugs, cigarettes, arms, and stolen vehicles; theft; extortion; and embezzlement. Public corruption and terrorism remain serious concerns.

 

Algeria is making significant progress in bringing its AML regime into line with international standards.

 

VULNERABILITIES AND EXPECTED TYPOLOGIES

 

The restricted convertibility of the Algerian dinar enables the central bank to monitor all international financial operations carried out by banking institutions. Most money laundering occurs primarily outside the formal financial system, through tax evasion, abuse of real estate transactions, and commercial invoice fraud. Algerian authorities are increasingly concerned by cases of customs fraud and TBML. Financial crime risks are increasing due to the widespread use of cash in Algeria’s economy.

 

KEY AML LAWS AND REGULATIONS

 

The following laws are applicable to money laundering in Algeria: Executive Decree no. 06-05 fixing the shape, design, content, and the acknowledgment of receipt of the declaration of suspicion; Regulation no. 12-03 on the prevention and fight against money laundering and terrorist financing; Executive Decree no. 13-157 amending and supplementing Executive Decree 02-127 on the creation, organization, and functioning of the Financial Intelligence Processing Unit (CTRF), Algeria’s FIU; Law no. 15-06 amending and supplementing Law No. 05-01 on the prevention and fight against money laundering and terrorist financing; Executive decree no. 15- 153 fixing the threshold for payments that must be made through the banking and financial circuits; Law no. 16-02 establishing rules for the application of the penal code, Law no. 66-156, as pertains to AML/CFT.

 

AML provisions in Algeria impose data collection and due diligence requirements on financial institutions processing wire transfers, with stricter requirements for cooperation with law enforcement authorities, upon request, for transfers exceeding $1,000. In addition, all payments for certain purchases in excess of the following amounts must be completed via the banking system: DZD 5 million (approximately $45,500) for real estate; or DZD 1 million (approximately $9,100) for goods and services. Non-compliance with these provisions could result in sanctions against the individual and/or financial institution.

 

AML DEFICIENCIES

 

Alternative remittance and currency exchange systems are not regulated.

Challenges in implementation of the AML law remain. The CTRF’s self-analysis identifies the need to educate bankers to increase the accuracy of reporting. While the CTRF has provided some information on the number of cases it is processing, additional information would be needed to further evaluate implementation. Furthermore, CTRF should work to increase its strategic analysis capabilities.

 

ENFORCEMENT/IMPLEMENTATION ISSUES AND COMMENTS

 

The CTRF is active in its processing and analysis of STRs, increasing its activity based on additional filings by banks. It is compiling and disseminating AML-related information to banks and engaging in some level of quantitative and qualitative self-analysis. A CTRF report in summer 2016 explains that after receiving STRs, the CTRF analyzes the data submitted and shares with other government entities. The report indicates the CTRF forwarded approximately 125 cases to judicial authorities but did not track results. This increased activity by the CTRF indicates Algeria is making an effort to improve its AML regime. Algeria should continue to work to fully implement its laws and regulations.

 

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SANCTIONS

There are no international sanctions currently in force against this country.

 

The Arab League (comprising 22 Arab member states), of which this country is a member, has approved imposing sanctions on Syria. These include: -

-      Cutting off transactions with the Syrian central bank

-      Halting funding by Arab governments for projects in Syria

-      A ban on senior Syrian officials travelling to other Arab countries

-      A freeze on assets related to President Bashar al-Assad's government

The declaration also calls on Arab central banks to monitor transfers to Syria, with the exception of remittances from Syrians abroad.

 

The Arab League has also boycotted Israel in a systematic effort to isolate Israel economically in support of the Palestinians, however, the implementation of the boycott has varied over time among member states. There are three tiers to the boycott. The primary boycott prohibits the importation of Israeli-origin goods and services into boycotting countries. The secondary boycott prohibits individuals, as well as private and public sector firms and organizations, in member countries from engaging in business with any entity that does business in Israel. The Arab League maintains a blacklist of such firms. The tertiary boycott prohibits any entity in a member country from doing business with a company or individual that has business dealings with U.S. or other firms on the Arab League blacklist.

 

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BRIBERY & CORRUPTION

 

Index

Rating (100-Good / 0-Bad)

Transparency International Corruption Index

34

World Governance Indicator – Control of Corruption

28

 

 

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INVESTMENT CLIMATE - Executive Summary (US State Department)

Algeria remains a potentially lucrative but uncertain and challenging market for many U.S. businesses, especially those with little experience in the Middle East and North Africa. While hydrocarbons are still the backbone of the Algerian economy, accounting for 98% of exports, 40-45% of GDP and 70% of budget revenues, there are opportunities in numerous other sectors including (but not limited to) agriculture, infrastructure, housing, alternative energy, pharmaceuticals and recycling. The IMF has predicted that unless GOA diversifies its hydrocarbon-based economy, by 2016/7 decreasing exports and falling hydrocarbon revenues will prevent GOA from meeting its current budgetary and subsidy obligations. GOA is sensitive to this projection and is acting, however tentatively and inefficiently, to begin the diversification process. This is the proverbial “ground floor” that presents significant opportunity for American companies in virtually every sector of the economy.

Companies must overcome the language barrier, distance, vagaries and corruption with the customs systems, an entrenched bureaucracy, and price/quality competition from Chinese, Turkish, and European businesses. International firms already here complain that the GOA lacks an economic vision and that laws and regulations both are constantly shifting and are applied unevenly, raising the perception of commercial risk for foreign investors. Business contracts are likewise subject to interpretation and revision, which has proved challenging to U.S. and international firms. The 49/51 law (requiring majority Algerian ownership of most businesses), insufficient IPR enforcement, Algeria’s closed borders and limited regional trade is another drawback, because the Algerian market on its own may not be attractive to firms that can locate elsewhere and create a regional distribution hub (e.g., the Singapore model). By some estimates, the informal economy controls 40-50 percent of the consumer goods market. Informal sector dominance, which supports an influx of cheap and/or counterfeit goods, makes it difficult for more expensive, genuine U.S. products to compete.

 

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