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Algeria’s Financial Institutions Exempt from Banking Regulations
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A recent investigation has uncovered a significant loophole in Algeria’s financial system. Financial institutions (FIs) not subject to the Bank of Algeria are exempt from strict regulations on opening anonymous accounts and operating fictitious names.
Who is affected?
The following FIs are exempt from these regulations:
- Insurance companies
- Brokerage institutions
- Postal services
These FIs do not have to verify the identity and address of their customers before opening an account, unlike banks and FIs under the Bank of Algeria’s supervision.
What are the consequences?
This lack of transparency creates a loophole for money laundering and terrorist financing (ML/TF). There is no legal or regulatory provision requiring these FIs to take reasonable steps to obtain sufficient data for verifying the identity of beneficial owners, except in cases where transactions are conducted through agents.
Gaps in Algeria’s anti-money laundering (AML) and combating the financing of terrorism (CFT) system
The investigation has uncovered several other gaps in Algeria’s AML/CFT system, including:
- Lack of guidelines for identifying high-risk customers, business relationships, or transactions
- Absence of regulations requiring FIs to maintain documents related to transactions conducted by customers for at least five years
- Failure to specify a ceiling for wire transfer amounts
- Lack of procedures for brokerage institutions in the payment chain
Recommendations
The study recommends that Algeria’s authorities take immediate action to address these gaps and ensure that all financial institutions, regardless of their status under the Bank of Algeria, are subject to strict regulations to prevent ML/TF.
Source: [Investigation Report]