COSOB Guideline No. 06-2025 of October 22, 2025, on High-Risk Countries

Issue Number: 0.1 Date: October 2025

Commission d’Organisation et de Surveillance des Opérations de Bourse – COSOB

Introduction

In the context of global challenges related to money laundering, terrorist financing, and the financing of proliferation of weapons of mass destruction, international and national regulatory frameworks impose precise and comprehensive measures on regulated institutions to apply enhanced due diligence procedures to mitigate emerging risks. These measures aim to protect the financial system and implement counter-measures when dealing with clients or entities linked to countries classified as high-risk.

These guidelines are based on key international standards, such as the recommendations of the Financial Action Task Force (FATF), as well as the global assessment of financial systems, specifically the Framework Reference -05 dated February 06, 2005, concerning the prevention and combating of money laundering and terrorist financing, as amended and supplemented. The objective is to enhance trust in the Algerian financial sector and reduce illicit financial flows crossing borders.

1. Objective and Scope

These guidelines are issued in application of the provisions of Articles 10 bis 9, 10 bis 10, and 10 bis 11 of Law No. 05-01, amended and supplemented by Law No. 25-10, and Regulation No. 01-24 of the Commission d’Organisation et de Surveillance des Opérations de Bourse (COSOB) dated 11 Muharram 1446 (corresponding to July 17, 2024), concerning the prevention and combating of money laundering, terrorist financing, and the financing of proliferation of weapons of mass destruction.

They also apply the provisions of Recommendation 19 of the FATF recommendations, aiming to clarify the enhanced due diligence measures and counter-measures to be adopted regarding high-risk countries in the field of combating money laundering, terrorist financing, and the financing of proliferation of weapons of mass destruction.

The objective of these guidelines is to provide a methodological framework for institutions subject to the supervision of the COSOB, including securities intermediaries, investment fund management companies, securities clearing companies, and operators of crowdfunding platforms, in accordance with the guidelines issued by the Financial Intelligence Unit (CTRF) on due diligence and internal control, consistent with Law No. 01-05, amended and supplemented and repealed.

2. Regulatory Framework

These guidelines, aimed at strengthening the system for preventing and combating money laundering, terrorist financing, and the financing of proliferation of weapons of mass destruction, fall within the regulatory and normative framework relying on the following national texts and international standards:

• Ordinance No. 66-156 dated June 8, 1966, concerning the Penal Code, as amended and supplemented.
• Decree No. 93-10 dated May 23, 1993, concerning the Securities Market, as amended and supplemented.
• Law No. 01-05 dated February 6, 2005, concerning the prevention and combating of money laundering and terrorist financing, as amended and supplemented.
• Executive Decree No. 23-429 dated November 29, 2023, concerning the General Register of Beneficial Owners of Legal Entities subject to Algerian law.
• Executive Decree No. 23-430 dated November 29, 2023, defining the scope of their powers and the modalities for exercising regulatory and/or supervisory and/or enforcement powers.
• Executive Decree No. 24-242 dated July 23, 2024, defining the modalities for preparing and implementing internal control programs.
• Executive Decree No. 25-101 dated March 12, 2025, concerning procedures for freezing and/or seizing funds.
• Executive Decree No. 25-102 dated March 12, 2025, defining the composition, organization, and operating procedures of the Committee for Monitoring Targeted International Sanctions.
• Executive Decree No. 25-103 dated March 12, 2025, defining the modalities for listing and delisting from the national list of persons and entities designated as terrorist.
• Regulation No. 01-24 of the COSOB dated 11 Muharram 1446 (corresponding to July 17, 2024), concerning the prevention and combating of money laundering, terrorist financing, and the financing of proliferation of weapons of mass destruction.
• COSOB Directive No. 07-24 dated November 21, 2024, concerning the framework for preventing money laundering, terrorist financing, and the financing of proliferation of weapons of mass destruction, including vigilance measures towards clients.
• COSOB Guideline No. 01/2025 issued on March 27, 2024, concerning measures for the identification and verification of beneficial owners.
• COSOB Guideline No. 02/2025 issued on March 27, 2025, concerning vigilance measures to be taken towards clients.
• COSOB Guideline No. 03/2025 issued on March 27, 2025, concerning measures for freezing and/or seizing funds and assets in the context of targeted financial sanctions.
• COSOB Guideline No. 04/2025 issued on March 27, 2025, concerning self-assessment for entities exposed to the risk of money laundering, terrorist financing, and the financing of proliferation of weapons of mass destruction.
• FATF Recommendations:
  • Recommendation 1 on the Risk-Based Approach.
  • Recommendations 6 and 7 on Targeted Financial Sanctions.
  • Recommendation 10 on Customer Due Diligence.
  • Recommendation 15 on New Technologies.
  • Recommendation 19 on Countries with Strategic AML/CFT Deficiencies.
  • Recommendations 24 and 25 on Beneficial Ownership Transparency.
  • Recommendation 26 on Supervision of Financial Institutions.
• FATF Interpretive Notes and Practical Guidance.

The compliance policies and risk management mechanisms relied upon by these texts constitute the mandatory legal framework that institutions subject to regulation must implement.

3. Definitions

For the purposes of these guidelines, the following terms are defined as follows:

A. High-Risk Countries: Countries for which enhanced measures must be taken, as called for by the FATF, and any other countries identified by the CTRF based on its national risk assessment.

B. Enhanced Measures: Additional due diligence procedures proportionate to the level of risk.

C. Counter-Measures: Strict measures defined by competent authorities to reduce the risks associated with dealing with high-risk countries.

D. The Unit: The Financial Intelligence Unit (CTRF).

E. Specialized International Body: The Financial Action Task Force (FATF).

4. Enhanced Due Diligence towards Supervised Entities

In accordance with Articles 31 and 33 of Regulation No. 01-24 and Article 27 of Directive No. 07-24 mentioned above, regulated institutions must apply enhanced due diligence measures, proportionate to the risk level, in their business relationships, including financial institutions, or natural or legal persons subordinate to countries classified as:

• By the FATF (GAFI) as calling for enhanced supervision;
• Or by the CTRF based on its independent assessment of high risks of money laundering, terrorist financing, and the financing of proliferation of weapons of mass destruction.

These measures include, in particular:

• Collection of additional information on the client and the transaction: Additional information must be obtained regarding the client and the beneficial owner to ensure precise verification and update of identification data at frequent intervals. It is also necessary to verify the source of funds and ensure their legitimacy.
• Enhancement of approval procedures: Business relationships with clients from high-risk countries require authorization from the General Management or the Board of Directors before establishing or continuing any business relationship or executing any ad hoc transaction. Official records must document the reasons for approval or rejection to ensure transparency and accountability.
• Limitation of products or services offered: Regulated entities must restrict the scope of financial products and services offered to clients from high-risk countries, avoiding the provision of complex or high-risk services that could increase the likelihood of their use for illicit activities.
• Enhanced and repeated monitoring of business relationships: Enhanced and repeated monitoring is mandatory for high-risk relationships, with increased frequency of continuous monitoring of transactions. Regulated entities must regularly review the risk files of these clients and monitor their transaction patterns to detect any irregular or suspicious activity.
• Systematic reporting of suspicions to the Unit: Suspicion reports must be submitted "without delay." It is preferable to notify the Unit before executing the transaction to enable the institution to exercise its right to inform. Regulated entities must also notify the Unit of any attempt at a suspicious transaction and must refrain from executing the transaction once a suspicion arises.

5. Counter-Measures for High-Risk Countries

In application of Articles 31 and 33 of Regulation No. 01-24 and Article 27 of Directive No. 07-24 mentioned above, regulated entities must apply enhanced due diligence measures and counter-measures, proportionate to the risk level, regarding business relationships and transactions with natural or legal persons from countries called upon by the FATF to adopt counter-measures, or those identified by the CTRF based on its independent assessment as representing high risks of money laundering, terrorist financing, or the financing of proliferation of weapons of mass destruction.

These measures include:

• Prohibition or restriction of certain transactions: Periodic circulars issued by the Unit may impose restrictions on transactions or freeze assets if necessary, through firm decisions such as suspension or complete termination of business relationships.
• Prohibition of expansion: Regulated entities must refrain from establishing or expanding their activities in these countries, and investment decisions must be subjected to strict scrutiny through the opening of branches, subsidiaries, or representation offices. Investments in these markets must also be carefully reviewed to minimize potential risk exposure.
• Limitation of relationships and financial transactions: This includes reducing the volume of financial transactions or suspending them if the risk warrants it. Clients must be notified in advance of these restrictions to ensure contractual compliance.
• Enhanced monitoring and detailed analysis: Regulated entities must apply enhanced due diligence measures to business relationships and financial transactions with natural or legal persons and entities subordinate to sanctioned countries.
• Periodic reassessment of existing relationships: Existing relationships with financial institutions in these countries must be subjected to periodic review. Informed decisions must be taken regarding the modification or termination of these relationships, based on a comprehensive assessment of the associated risks.

6. Governance and Implementation Mechanisms

The Board of Directors or Supervisory Board of the regulated institution must be periodically informed of the institution's exposure to high-risk countries. Internal policies must include risk management related to these countries in a structured manner. The Compliance Officer for combating money laundering, terrorist financing, and the financing of proliferation of weapons of mass destruction is responsible for validating internal mechanisms related to these measures and procedures.

Regulated entities must establish:

• Clearly defined internal procedures specifying the responsibilities and tasks of each department.
• An internal control system allowing for the detection of incidents, the taking of corrective actions, and reporting to management.
• Regular training for employees on detecting risks associated with high-risk countries and implementing established policies.
• Monitoring and detection systems to analyze suspicious transactions, with continuous updates of client databases against lists issued by the FATF and the Unit.

7. Cooperation with Authorities and Dissemination of Lists

Cooperation with authorities is a cornerstone of the system. Regulated institutions must:

• Send relevant information and reports to the Unit without delay: They must respond promptly to any request for information or instructions issued by the Unit. Lack of cooperation with the Unit cannot be invoked as a defense.

• Notify the COSOB of implemented measures: Regulated entities must provide periodic and detailed reports on measures taken regarding clients and transactions associated with high-risk countries, in the context of the annual report on the AML/CFT/CPF prevention system.

• List dissemination mechanism: In application of the provisions of Law No. 05-01, amended and supplemented, particularly Articles 10 bis 9 and 10 bis 11, and in line with Recommendation 19 of the FATF recommendations, the COSOB, in coordination with the CTRF, works to disseminate counter-measures and concerns regarding weaknesses in AML/CFT systems in other countries, as follows:

  First - Counter-Measures:

  • The CTRF notifies the COSOB of decisions issued by the FATF or those resulting from its independent risk assessment.
  • The COSOB issues a circular officially incorporating these data, specifying the counter-measures regulated entities must apply proportionate to the determined risk level, and notifies all regulated entities of these circulars, identifying appropriate preventive measures.

  Second - AML/CFT Systems:

  • Concerns regarding weaknesses in AML/CFT systems in other countries:
  • The CTRF periodically notifies the COSOB, or whenever necessary, of circulars concerning weaknesses or deficiencies in AML/CFT systems in other countries.
  • The COSOB notifies regulated entities of these circulars, requiring them to take immediate preventive or corrective measures.

8. Periodic Review

These guidelines are subject to periodic review by the COSOB and the CTRF, or upon updates from the FATF.

9. Sanctions

Any violation of the mechanisms set forth in these guidelines exposes the regulated entity to the penalties provided for in the applicable Algerian Penal Code.

October 22, 2025

The President Youssef Bouznada