Financial Crime World

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

Introduction

The International Monetary Fund (IMF) and the World Bank conducted a joint assessment of Algeria’s compliance with the Basel Core Principles for Effective Banking Supervision. The assessment aimed to evaluate the effectiveness of Algeria’s regulatory framework in maintaining financial stability.

Key Findings

Precondition for Effective Banking Supervision (CP 1)

  • Weak Public and Market Infrastructure: Algeria’s public and market infrastructure is weak, requiring amendments to laws and regulations.

  • Recommendations for Improvement:

    *   Enhance the regulatory framework to address weaknesses in public and market infrastructure
*   Implement changes to laws and regulations as recommended by the assessment team

Licensing and Structure (CPs 2-5)

  • Largely Compliant: Algeria has made significant progress in complying with these principles.

  • Essential Strengthening of Licensing Procedures:

    *   Review and revise licensing procedures to ensure they are effective and transparent
*   Implement measures to prevent irregularities in the licensing process

Prudential Regulations and Requirements (CPs 6-15)

  • Nine Principles Non-Compliant: Algeria’s authorities need to enforce compliance with existing rules.

  • Recommendations for Improvement:

    *   Review and revise prudential regulations and requirements to ensure they are effective and compliant
*   Implement measures to prevent non-compliance with existing rules

Methods of Ongoing Supervision (CPs 16-20)

  • Most Principles Non-Compliant: Algeria is taking steps to improve off-site and on-site supervisions through an IMF technical assistance program.

  • Recommendations for Improvement:

    *   Enhance coordination between supervisors and external auditors
*   Implement measures to prevent non-compliance with ongoing supervision principles

Information Requirements (CP 21)

  • Reporting Process: The reporting process could be improved by developing coordination with external auditors.

  • Recommendations for Improvement:

    *   Develop a system for coordinating with external auditors
*   Ensure that external auditors inform the supervisory authority of any matters of material significance

Formal Powers of Supervisors (CP 22)

  • Largely Compliant: Algeria is largely compliant but needs to avoid supervisory forbearance.

  • Recommendations for Improvement:

    *   Review and revise formal powers of supervisors to prevent supervisory forbearance
*   Implement measures to ensure that supervisors exercise their formal powers effectively

Cross-Border Banking (CPs 23-25)

  • Non-Compliant: Algeria has the power to enter into formal agreements with other country supervisors.

  • Recommendations for Improvement:

    *   Review and revise cross-border banking regulations and requirements
*   Implement measures to ensure compliance with international standards

Conclusion

Algeria has made progress in establishing its regulatory framework, but there are still areas where it does not comply with the Basel Core Principles. However, steps are being taken to improve off-site and on-site supervisions through an IMF technical assistance program.