TUNISIA
Summary
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Sanctions

EU - Financial

FAFT AML Deficient

No

Higher Risk Areas

 

Not on EU White list equivalent jurisdictions

Failed States Index (Political Issues)(Average Score)

Offshore Finance Centre

Medium Risk Areas

 

Compliance with FATF 40 + 9 Recommendations

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

World Governance Indicators (Average Score)

 

 

ANTI-MONEY LAUNDERING

 

FATF Status

Tunisia is not on the FATF List of Countries that have been identified as having strategic AML deficiencies

 

Compliance with FATF Recommendations

The last Mutual Evaluation Report relating to the implementation of anti-money laundering and counter-terrorist financing standards in Tunisia was undertaken by the Financial Action Task Force (FATF) in 2016. According to that Evaluation, Tunisia was deemed Compliant for 9 and Largely Compliant for 9 of the FATF 40 Recommendations.

 

Key findings

Tunisia must address the growth of the activities of several terrorist organizations (Ansar alShari’a, ISIS) on its territory. Investigations under way have identified typology elements related to the financing of these terrorist activities: offenses involving postal transfers or transfers to the families of persons who have died in combat and the provision of financial support to bring combatants to war zones. For example, in 2014, the National Counter-Terrorism Unit (UNECT) placed ten people in police custody in the context of a case involving an association suspected of dealings with a terrorist organization. Moreover, UNECT has referred several cases to the Office of the Public Prosecutor for the financing of travel expenses for combatants headed to Syria.

However, although criminal prosecutions are under way, the Tunisian authorities have not yet had any convictions for acts described as terrorist financing. The length of the investigations and judicial procedures, the lack of resources for the law enforcement authorities and the deficiencies in the legal regime in terms of special investigative techniques seem to be obstacles to rapid and efficient prosecutions.

The preventive measures continue to suffer from technical shortcomings and implementation problems continue. The mechanism currently in effect for the implementation of Resolution 1267 requires entities subject to the AML/CFT provisions to consult lists accessible on the Ministry of Finance website and to freeze the assets of listed persons. However, it does not, as required by the resolution, create a general prohibition applicable to all natural and legal persons on the provision of funds or economic resources to the persons included on list 1267. Moreover, the implementation and consultation of the U.N. lists seem insufficient in the case of some banks and non-existent for non-bank financial institutions and DNFBPs. Under Resolution 1373, the freezing of the assets of designated persons or implementation of freezing measures adopted by other countries involves the issuance of an ordinance at the request of the Chief Justice of the Court of First Instance of Tunis in turn at the request of the Prosecutor General, for which a judicial proceeding must be opened. This system does not establish a general prohibition on providing economic resources to designated persons as required by the resolution and does not allow for immediate freezing. Moreover, no provision for the prevention of the financing of the proliferation of weapons of mass destruction has been introduced.

Use of associations for the financing of terrorism is a major concern for the Tunisian authorities and has led them to take measures to suspend the activities of 157 associations. The law has also introduced transparency measures to identify the persons in charge of the administration and management of associations and to ensure the integrity of incoming and outgoing funds through the publication of their financial statements. However, the weak number of officials in charge of monitoring the sector impedes adequate oversight of the activities of associations.

 

US Department of State Money Laundering assessment (INCSR)

Tunisia was deemed a ‘Monitored’ Jurisdiction by the US Department of State 2016 International Narcotics Control Strategy Report (INCSR).

Key Findings from the report are as follows: -

 

Tunisia is not considered a regional financial center. Tunisia has strict currency exchange controls, which authorities believe mitigate the risk of international money laundering. There is a low level of organized crime in Tunisia. The primary domestic criminal activities that generate laundered funds are clandestine immigration, trafficking in stolen vehicles, and narcotics. Weapons, narcotics, and suspect cash have been seized in many Tunisian cities, some of which are near the borders with Libya or Algeria. Reports of corruption and financial crimes have been increasing since the 2011 revolution. The smuggling of weapons and contraband through Tunisia is used to support terrorist groups, including al-Qaida in the Islamic Maghreb. Tunisia is especially concerned about militants entering from adjacent Libya.

Money laundering occurs through the financial sector, especially through informal economic activity involving smuggled goods. Since Tunisia has strict currency controls, it is likely that underground remittance systems such as hawala are prevalent. Trade-based money laundering is also a concern. Throughout the region, invoice manipulation and customs fraud are often involved in hawala counter-valuation. Tunisia has two free trade zones, in Bizerte and Zarzis.

Tunisia has seven offshore banks, and the number of companies with foreign participation is 1,780, of which 1,105 are offshore international business companies (IBCs).

 

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SANCTIONS

The EU has imposed restrictive measures directed against certain persons, entities and bodies in view of the situation in Tunisia, specifically those responsible for the misappropriation of Tunisian State funds.

 

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

41

World Governance Indicator – Control of Corruption

55

 

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INVESTMENT CLIMATE - Executive Summary (US State Department)

The Tunisian Government (GOT) places a priority on attracting foreign direct investment (FDI). This focus has led some Tunisian businessmen to question whether governmental incentives for FDI favor foreign investors over Tunisians. Historically, the government encouraged export-oriented FDI in key industrial sectors, such as call centers, electronics, aerospace and aeronautics, automotive parts, and textile/apparel manufacturing. To minimize possible negative impact on domestic competitors and employment, the GOT screens FDI that targets the domestic market.

Foreign investment in Tunisia is regulated by the Investment Code (Law 1993-120), last amended in 2009. A new Code is currently under study. The goals of the new law include job creation, compliance with international standards, reduced regional economic disparities, and infrastructure development in the country’s less-developed west and south-central regions. Proposed revisions that relax constraints on FDI may include expansion of targeted high priority investment sectors, additional duty-free treatment of production inputs, and lower differential rates of taxation between the Code’s “offshore” and “onshore” sectors.

The current Investment Code divides potential investments into two categories:

“Offshore” investment is defined as entities where foreign capital accounts for at least 66% of equity and at least 70% of production is destined for the export market. Some exceptions to these percentages exist for the agricultural sector.

“Onshore” investment caps foreign equity participation to a maximum of 49% in most non-industrial projects. In certain cases subject to government approval, “onshore” industrial investment may attain 100% foreign equity.

It is difficult to predict what may be in a new code as the GOT in May 2014 withdrew the pending code for further revision. Existing hurdles for potential FDI, however, could remain:

Foreign investors may still be denied national treatment in the agriculture sector. Foreign ownership of agricultural land would likely remain prohibited.

GOT authorization could remain difficult to obtain for “onshore” companies outside the tourism sector, especially if the foreign capital share exceeds 49%.

Note: The Code’s “offshore/onshore” template currently in effect is being re-examined as part of the Investment Code’s revision.

For investments in manufacturing, agriculture, agribusiness, public sector infrastructure, and certain services, only a simple declaration of “intent to invest” may be required, depending on the project. Proposed investment in other sectors can necessitate various Tunisian government authorizations.

 

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FURTHER REPORTS

4 September 2012  -  Extract from IMF Report: Tunisia: 2012 Article IV Consultation—Staff Report:

"Tunisia’s anti-money laundering and combating the financing of terrorism (AML/CFT) framework was assessed in 2006 against the AML/CFT standard, the Financial Action Task Force (FATF) 40+9 Recommendations. The evaluation was conducted by the World Bank in the context of the FSAP update. The final report indicated that Tunisia had adopted an AML/CFT law, and the criminalization of money laundering and the financing of terrorism were broadly in line with international standards. However, key weaknesses remained, including the absence of a legal basis for freezing funds in accordance with United Nations Security Council Resolution 1267 and 1373, the inability of the financial sector supervisors to engage in international cooperation, and deficiencies related to the identification of beneficial owners. Recent political changes in Tunisia and related efforts to trace and identify stolen assets have highlighted significant challenges in the implementation of the existing AML/CFT framework. In line with the authorities’ intention to strengthen their AML /CFT framework, it has been agreed that a new assessment of the AML/CFT regime should be conducted towards the end of 2012."

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