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

Ministry of Finance
Financial Intelligence Processing Unit (CTR)

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,

• Pursuant to Law No. 05-01 of 27 Dhu al-Hijjah 1425, corresponding to February 6, 2005,
  regarding the prevention and fight against money laundering and terrorist financing, as amended and supplemented,
• In accordance with Executive Decree No. 22-36 of 1 Joumada Ethania 1443,
  corresponding to January 4, 2022, establishing the missions, organization, and functioning of the Financial Intelligence Processing Unit,
• After deliberation by the Council of the Financial Intelligence Processing Unit,
  Issues the instruction as follows:

Article 1: This instruction aims to define the obligations of regulated entities towards
customers 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-Hijjah 1425, corresponding to February 6, 2005, regarding the prevention and fight against money laundering and terrorist financing, as amended and supplemented, stipulating that any Algerian or foreign national, elected or appointed, who has held or currently holds high legislative, executive, administrative, or judicial offices in Algeria or abroad, as well as senior officials of political parties, and persons who hold or have held important functions within or for international organizations.

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

1. Own or control the client, the client's agent, or the beneficiary of life insurance contracts;
2. The natural person on whose behalf a transaction is conducted or on whose behalf a business relationship is established;
3. Persons who ultimately exercise effective control over a legal entity.
   Regulated Entities: Financial institutions, designated non-financial businesses and professions, as well as their foreign branches, to the extent permitted by laws and regulations in force in the countries where these branches operate. Client: A natural or legal person who transacts with a 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 businesses and professions are required to identify, understand, and assess risks and apply a risk-based approach in customer due diligence procedures regarding clients who are Politically Exposed Persons, which represent the risks stipulated by the aforementioned Law No. 05-01, as amended and supplemented, along with its implementing texts, including instructions issued by the Financial Intelligence Processing Unit (CTR), and to establish necessary policies, strategies, and procedures for this purpose.

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

• Establish an appropriate risk management system to determine whether the client, their representative, beneficial owner, a family member, or closely associated persons are among Politically Exposed Persons, including a client acceptance policy for this category that accounts for client classification based on risk level, with the obligation to review this classification periodically or upon changes as applicable;

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

• Not enter into or continue a business relationship with Politically Exposed Persons without first obtaining approval from the competent authority, applying enhanced due diligence measures, and adopting strict monitoring;

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

• Conduct continuous monitoring of the business relationship, verify its security and proportionality to financial activity, pay particular attention to transactions and operations performed, assess the purpose of these operations, and record the results in special registers.

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

• Notify the competent authority before paying a claim from life insurance proceeds;
• Conduct a thorough review of the entire business relationship;
• Consider filing a suspicious transaction report with the CTR.

Article 6: Non-compliance with the provisions of the aforementioned Law No. 05-01, as amended and supplemented, and its implementing texts, including this instruction, is subject to penalties stipulated by the prevailing regulations.

The President of the Financial Intelligence Processing Unit Mohammed SAOUDIA