Instruction CTRF No. 03-2023 on Obligations Regarding Politically Exposed Persons

Ministry of Finance
Financial Intelligence Processing Unit (CTRF)

Instruction No. 03 of the year 2023, dated 21 Jumada El-Oula, corresponding to December 5, 2023 regarding the obligations of regulated entities towards Politically Exposed Persons

The President of the Financial Intelligence Processing Unit (CTRF),

• Having regard to Law No. 05-01 of 27 Dhou-el Hidjah 1425, corresponding to February 6, 2005,
  relating to the prevention and fight against money laundering and the financing of terrorism, as amended and supplemented,
• In accordance with Executive Decree No. 22-36 of 1st Joumada Ethania 1443
  corresponding to January 4, 2022, fixing the missions, organization, and functioning of the Financial Intelligence Processing Unit (CTRF),
• After deliberation by the Council of the Financial Intelligence Processing Unit (CTRF),
  Issues the instruction whose content follows:

Article 1: This instruction aims to define the obligations of regulated entities towards clients who are Politically Exposed Persons.

Article 2: The terms and expressions contained in this instruction have the following meanings:
Politically Exposed Person: A politically exposed person is defined in accordance with the definition provided in Article 4 of Law No. 05-01 of 27 Dhu al-Hidjah 1425, corresponding to February 6, 2005, relating to the prevention and fight against money laundering and the financing of terrorism, as amended and supplemented, stipulating that any Algerian, foreigner, elected or appointed official, who has exercised or is exercising high legislative, executive, administrative, or judicial functions in Algeria or abroad, and senior officials of political parties, as well as persons who exercise or have exercised important functions within or for international organizations.

Beneficial Owner: The physical person(s) who, ultimately:

1. Own or control the client, the client's agent, or the beneficiary of life insurance contracts;
2. The physical person for whom a transaction is carried out or for whom a business relationship is established;
3. Persons who, ultimately, exercise effective control over the legal entity.
   Regulated Entities: Financial institutions, designated non-financial establishments and professions, and their branches operating abroad, to the extent authorized by the laws and regulations in force in the countries where these branches operate. Client: A physical or legal person, or anyone dealing with the regulated entity. Business Relationship: The relationship established between the client and any financial institution, linked to any activity.

Article 3: Financial institutions and designated non-financial enterprises and professions are required to identify, understand, and assess risks and apply a risk-based approach in the due diligence procedures for clients who are Politically Exposed Persons, which represent the risks foreseen by Law No. 05-01 mentioned above, as amended and supplemented, as well as its implementing texts, notably the instructions issued by the Financial Intelligence Processing Unit (CTRF), and to put in place the necessary policies, strategies, and procedures for this purpose.

Article 4: In addition to the due diligence measures provided for by Law No. 05-01, as amended and supplemented, mentioned above and its implementing texts, regulated entities are required to take the measures mentioned below regarding Politically Exposed Persons:

• Put in place an appropriate risk management system allowing the determination of whether the client or their representative, the beneficial owner, a family member, or persons closely associated with them, are among the Politically Exposed Persons, including a client acceptance policy for this category that takes into account the classification of clients according to their risk level, with the obligation to review this classification periodically or in case of change as appropriate;

• Develop clear policies, procedures, and system controls for the establishment of business relationships with Politically Exposed Persons;

• Not enter into a business relationship, or continue a business relationship with Politically Exposed Persons, except after obtaining authorization from the superior authority, taking enhanced due diligence measures, and adopting strict monitoring;

• Take reasonable measures to determine the origin of funds of persons or beneficial owners identified as Politically Exposed Persons;

• Perform continuous monitoring of the business relationship, verify its security and proportionality with the financial activity, pay particular attention to movements and operations carried out, and the purpose of these operations, and record the results in special registers.

Article 5: Regulated entities must take the necessary measures to determine if the client is a Politically Exposed Person, or a beneficial owner of a life insurance contract, at the latest at the time of the payment of the indemnity and when higher risks are identified. If so, they must proceed as follows:

• Inform the superior authority before paying an indemnity from the proceeds of life insurance;
• Conduct a thorough review of the entire business relationship;
• Consider sending a suspicious activity report to the CTRF.

Article 6: Non-compliance with the provisions of Law 05-01 mentioned above, as amended and supplemented, and its implementing texts, notably this instruction, is punishable by the penalties provided for by the regulations in force.
The President of the Financial Intelligence Processing Unit (CTRF) Mohammed SAOUDIA