Algeria: Effort to combat money laundering and 'terror financing'

A new order was introduced on 13 February in an attempt to tighten up on money laundering and so-called 'terror financing'. The ordinance puts the banks in the front line by giving them the task of detecting any attempt to use their channels for terrorist purposes. The financial institutions will now be obliged to play a monitoring role and report any suspicious activity that could serve the terrorists' interest.

Under Article 7 of the order, banks must conduct thorough checks before opening a bank or passbook account, holding shares or bonds, allocating a strongbox or agreeing to any other financial operations or relationships.

The article stipulates that banks must have a “suitable risk management system in order to determine whether a potential customer, actual customer or beneficiary is politically exposed, and to take any measures to allow the identification of the origin of the capital, and to provide enhanced on-going surveillance of the business relationship”. Any failure to abide by the new regulations could result in a fine of between 10 million and 50 million dinars. The new order also empowers courts to seize or freeze assets being directed towards terrorist activities for a renewable term of one month. A specialist body, the state prosecutor or international authorities can request the seizure, which is subject to an appeal.

“Banks are emerging as important players in the fight against money laundering and all forms of financial crime,” said Abderrahmane Benkhalfa who is the chief representative of the Association of Banks and Financial Institutions. “That task is already being taken on by banks through the general laws on the world of finance and the regulatory instructions issued by the Central Bank.”

He added: “Banks have a responsibility to manage, control and balance all cross-border flows of capital into and out of Algeria."

For more news and expert analysis about Algeria, please see Algeria Focus and Algeria Politics & Security.

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