Financial Crime World

Basel Core Principles Assessment of Algeria’s Compliance with Effective Banking Supervision

Overview

The Basel Core Principles Assessment of Algeria’s Compliance with Effective Banking Supervision provides an evaluation of Algeria’s banking supervision system based on the Basel Core Principles for Effective Banking Supervision. The assessment was conducted by a joint IMF/World Bank team in November 1999, and it follows the “Core Principles Methodology” approved by the Basel Committee on Banking Supervision.

Assessment Findings

The main findings of the assessment are as follows:

Precondition for Effective Banking Supervision (CP 1)

  • There are weaknesses in the public and market infrastructure.
  • Some amendments to laws and regulations are recommended.
  • The major issue remains the divestiture of the State from the banking sector.

Licensing and Structure (CPs 2-5)

  • The CPs in this group of principles are essentially in compliance, but a strengthening of licensing procedures is essential.

Prudential Regulations and Requirements (CPs 6-15)

  • 9 out of 10 principles in this group are noncompliant.
  • The authorities have made efforts to issue new regulations, but they need to enforce compliance with these rules.
  • There is also a need to adopt the Financial Action Task Force (FATF) principles on money laundering.

Methods of Ongoing Supervision (CPs 16-20)

  • Algeria does not comply with most of the CPs in this category.
  • However, steps are being taken to improve off-site and on-site supervisions through an intensive IMF technical assistance program.

Information Requirements (CP 21)

  • The reporting process of Algerian banks could be improved by developing coordination with external auditors.
  • They should be required to immediately inform the supervisory authority if they detect any matters of material significance to the bank concerned.

Formal Powers of Supervisors (CP 22)

  • Measured against essential criteria, Algeria is largely compliant with CP 22.
  • However, additional measures should be taken to avoid supervisory forbearance.

Cross-Border Banking (CPs 23-25)

  • Algeria is not compliant with this group of principles, but for the time being this is not a priority.
  • The Bank of Algeria, however, would have the power to enter into formal agreements with other country supervisors to facilitate future supervision.

Conclusion

Overall, the assessment highlights areas where Algeria needs to improve its banking supervision system to meet international standards, such as strengthening licensing procedures, enforcing prudential regulations, and improving ongoing supervision methods.