Financial Crime World

Customer Due Diligence (CDD) Measures in Algeria

Section 1: Understanding CDD

Introduction

  • CDD as a Critical Component: Customer Due Diligence is an essential part of anti-money laundering (AML) and combating the financing of terrorism (CFT) efforts.
  • Establishing Policies and Procedures: Financial institutions must set up policies and procedures to identify customers and their representatives.

Section 2: Evaluation of Account Movement and Transactions

Risk-Based Approach

  • A risk-based approach is crucial for evaluating account movements and transactions.
  • The level of evaluation should be consistent with the associated risk linked to each category of customers.

Risk Levels

Higher Risks

  • Identified by three risk factors:
    • Customer Risk Factor: unusual business relationship, non-resident customer
    • Transaction Risk Factor: large transactions, unusual patterns
    • Country Risk Factor: high-risk country, terrorist organization

Lower Risks

  • Identified by three risk factors:
    • Customer Risk Factor: resident customer with low transaction volume
    • Transaction Risk Factor: pension scheme with limited services
    • Country Risk Factor: low-risk country

Associated CDD Measures

Enhanced CDD Measures for Higher-Risk Business Relationships

  • Obtaining additional information about the customer and updating identification data regularly
  • Obtaining information on the source of funds or wealth
  • Conducting enhanced monitoring of transactions

Simplified CDD Measures for Lower-Risk Customers

  • Verifying identity after establishing a business relationship
  • Reducing frequency of customer updates
  • Reducing degree of ongoing monitoring

Sanctions and Disciplinary Proceedings

Consequences of Non-Compliance

  • Non-compliance with CDD guidelines subjects financial institutions to sanctions.
  • Failure to implement freezing measures linked to terrorist assets or entities can lead to disciplinary proceedings.

Conclusion

This document provides a comprehensive framework for Algerian financial institutions to adhere to international AML/CFT standards.