COSOB Guideline No. 05-2025 of October 22, 2025, on Politically Exposed Persons (PEPs)

People's Democratic Republic of Algeria
COSOB Guideline No. 05-2025
Dated October 22, 2025
Concerning Politically Exposed Persons
Version Number 0.1
October 2025
Commission for the Organization and Supervision of Stock Exchange Operations Commission d’Organisation et de Surveillance des Opérations de Bourse – COSOB -

Introduction
Framework for Strengthening the Anti-Money Laundering and Counter-Terrorist Financing System The issue of dealing with Politically Exposed Persons (PEPs) and terrorist financing is one of the most important axes of the international standards challenge. It poses a risk to the integrity of the Algerian financial sector, as these individuals, due to their positions or influence, may exploit their functions for purposes of corruption and illegal activities. The objective of these guidelines is to provide institutions subject to COSOB supervision with a clear and compliant framework, incorporating the recommendations of the Financial Action Task Force (FATF) for the full implementation of enhanced due diligence.

Strict monitoring and surveillance of this category of clients is a guarantee for protecting the integrity and stability of the Algerian financial sector.

1. Objective and Scope
   The objective of these guidelines is to define the obligations of institutions subject to COSOB supervision regarding Politically Exposed Persons (PEPs) among their clients.

These guidelines apply to all institutions subject to COSOB supervision, including securities, employment bodies, brokers, investment fund management companies, crowdfunding platforms, securities financing companies, and stock financing.

2. Legal and Regulatory Framework and Basic Definitions
   This guideline falls within the regulatory and normative framework aimed at strengthening the system for preventing and combating money laundering, terrorist financing, and the financing of weapons of mass destruction. It relies on the following national texts and international standards:

• Decree No. 66-156 dated June 8, 1966, concerning the Penal Code, as amended and supplemented.
• Presidential Decree No. 93-10 dated May 23, 1993, concerning the Stock Exchange, 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 legal persons subject to Algerian law regarding beneficial owners.
• Executive Decree No. 23-430 dated November 29, 2023, determining the modalities for exercising regulatory and/or supervisory authorities and/or their duties.
• Executive Decree No. 24-242 dated July 23, 2024, determining 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, determining the composition and organization of the committee for monitoring international targeted sanctions.
• Executive Decree No. 25-103 dated March 12, 2025, determining the modalities for inclusion and removal from the national list of persons and entities designated as terrorist.
• COSOB Regulation No. 24-01 dated 11 Muharram 1446 (corresponding to July 17, 2024), concerning the prevention and combating of money laundering, terrorist financing, and the financing of weapons of mass destruction.
• COSOB Instruction No. 24-07 dated November 21, 2024, concerning due diligence measures towards clients in the framework of preventing money laundering, terrorist financing, and the financing of weapons of mass destruction.
• COSOB Guideline No. 01/2025 issued on March 27, 2024, concerning identification and verification measures for beneficial owners.
• COSOB Guideline No. 02/2025 issued on March 27, 2025, concerning due diligence measures to be taken towards clients.
• COSOB Guideline No. 03/2025 issued on March 27, 2025, concerning freezing and/or seizing measures of funds and assets within the framework of targeted financial sanctions.
• COSOB Guideline No. 04/2025 issued on March 27, 2025, concerning self-assessment of institutions subject to the risk of money laundering, terrorist financing, and the financing 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 11 on record-keeping.
  • Recommendation 12 on Politically Exposed Persons.
  • Recommendation 15 on new technologies.
  • Recommendation 19 on high-risk countries.
  • Recommendations 24 and 25 on beneficial ownership transparency.
  • Recommendation 26 on supervision of financial institutions.
• Interpretative notes and practical guides issued by the FATF.

Adopted Definitions
"Politically Exposed Persons": Algerians and foreigners entrusted with or who have been entrusted with prominent public functions in Algeria or abroad, such as Heads of State or Government, senior politicians, senior executives of state-owned companies, senior judicial or regulatory officials, senior executives of political parties, as well as persons entrusted with or who have been entrusted with prominent functions by an international organization, such as senior management members, including directors, deputy directors, and board members or equivalent positions.

This definition does not apply to persons holding middle or lower-level positions.

"Beneficial Owner": The natural person or persons who ultimately and directly own or control the client or the client's agent, or the beneficiary of life insurance or investment contracts, or:

1. On whose behalf a transaction is conducted or a business relationship is established;

2. Who exercise actual control over a legal entity or legal arrangements.

3. General Measures and Risk-Based Approach
   Institutions subject to COSOB supervision must:

• Risk Identification and Assessment: Have a suitable risk management system enabling them to identify whether a client, a family member, or a close associate is or is likely to be a Politically Exposed Person, and apply their specific enhanced due diligence measures based on a risk-based approach.
• Risk Management System: Implement a suitable risk management system to detect whether a client, representative, close associate, or beneficial owner belongs to the category of Politically Exposed Persons, with a clear policy for accepting clients from this category. Client classification must take into account their specific risk level, with periodic review or immediate review in case of changes.
• Clear Procedures: Develop clear policies, procedures, and system controls for establishing business relationships with Politically Exposed Persons. Persons whose status has expired must be treated with the same enhanced procedures as long as the risks associated with them persist.

4. Mandatory Enhanced Due Diligence Measures
   In addition to the ordinary due diligence measures stipulated in COSOB Instruction No. 01-05 and Regulation No. 01-24 dated 11 Muharram 1446 (July 17, 2024), concerning the prevention and combating of money laundering, terrorist financing, and the financing of weapons of mass destruction, and COSOB Instruction No. 07-24 dated November 21, 2024, concerning due diligence measures towards clients in the framework of preventing money laundering, terrorist financing, and the financing of weapons of mass destruction, institutions subject to COSOB supervision must apply the following enhanced measures towards Politically Exposed Persons:

• Approval from the General Directorate or Board of Directors: Establishing or continuing a business relationship with a Politically Exposed Person is prohibited without prior authorization from the General Directorate or Board of Directors of the institution subject to COSOB supervision.
• Verification of Source of Funds and Wealth: Take all reasonable measures to determine the origin of funds and wealth, and ensure enhanced and continuous monitoring of the business relationship.
• Enhanced and Continuous Monitoring: Ensure enhanced and continuous monitoring of the business relationship. Special attention must be paid to transactions and operations executed and their purposes, with results recorded in special registers.
• Investigation and Reporting of Suspicious Activities: Institutions subject to COSOB supervision must notify the Financial Intelligence Unit (FIU) of all suspicious operations, including attempts to execute or refusals to execute operations due to client behavior, without delay and as soon as suspicion arises.

Institutions subject to COSOB supervision must ensure documentation of all measures taken, starting from the determination of the Politically Exposed Person category up to the approval of relationships.

5. Liability and Penalties
   Any violation of the measures stipulated in these guidelines exposes the institution subject to COSOB supervision to the penalties provided for under the current Algerian legislation.

Algeria, October 22, 2025
The President
Yousef Bouznada