AML/CFT obligations for banks and financial institutions in Algeria (2026)

Banks are the natural entry point for illicit money into the economy: it is through an account, a loan, a transfer or a foreign trade transaction that funds of dubious origin try to take on a legal appearance. The AML/CFT obligations for banks and financial institutions are therefore the most detailed and most closely supervised in Algeria's framework. They affect every function: branches, credit, foreign trade, cards and payments, IT and senior management.

Algeria's removal from the FATF grey list on 19 June 2026 was achieved largely thanks to reforms in the banking sector. The challenge now is to demonstrate their effectiveness over time: the next mutual evaluation, expected around 2029, will judge the quality of files and reports, not the number of procedures. This guide reviews the applicable texts, the key obligations, the red flags and the most common mistakes.

1. Applicable texts and supervisory authority

Law No. 05-01 of 6 February 2005, amended in particular by Law No. 23-01 of 7 February 2023 and then by Law No. 25-10 of 24 July 2025, lists banks and financial institutions among the obliged financial institutions (Article 4). Its Article 10 bis 3 designates the Banking Commission as the control, supervisory and regulatory authority for these institutions, as well as for the financial services of Algérie Poste, exchange offices and exchange agents. For an overview of the reform, read our analysis of Law 23-01 on money laundering in Algeria.

The Bank of Algeria issues these rules; the Banking Commission monitors compliance, off-site and on-site, and can sanction breaches. Suspicious transaction reports are filed with the CTRF, the financial intelligence unit attached to the Ministry of Finance, whose Instruction No. 02 of 4 December 2023 sets out the reporting arrangements.

2. Key obligations

Risk classification

Regulation No. 24-03 requires a risk identification and assessment framework proportionate to the nature and size of the institution. Instruction No. 04-2026 applies it to each customer: the rating rests on four parameters, namely the customer, products and services, geographic areas and delivery channels. This risk map must reflect the national and sectoral risk assessment that Law No. 25-10 requires to be updated and shared with obliged entities.

Customer due diligence and beneficial owners

Before any business relationship, the bank identifies and verifies the customer, their agent or legal representative and their beneficial owners, and understands the purpose of the relationship. Anonymous accounts or accounts in obviously fictitious names are prohibited. For legal entities, Instruction No. 04-2026 requires consulting the public register of beneficial owners kept by the CNRC (national trade register centre). PEPs require senior management approval, and file reviews follow the risk level: at least once a year for high risk, every three years for medium risk, every five years for low risk.

Suspicious transaction reporting to the CTRF

Any transaction, or attempted transaction, that the bank suspects derives from an offence or is linked to terrorist financing must be reported to the CTRF. The report is confidential: the customer must never be informed. A clear internal channel, from branch to compliance officer, and a written analysis of each alert determine the quality of reports.

Asset freezing and targeted financial sanctions

Customers, beneficial owners, counterparties and originators must be screened against the applicable sanctions lists, in particular those of the United Nations Security Council. A confirmed match triggers an immediate freeze and notification of the authorities. Refusing the relationship is mandatory when the customer appears on a sanctions list.

Correspondent banking

Regulation No. 25-14 requires, before any new correspondent relationship, an assessment of the respondent institution and its AML/CFT framework, approval from senior management or the management board, a written allocation of responsibilities and an update of existing agreements. Any relationship with a foreign shell bank is prohibited.

Record keeping

Identification documents, transaction records, alert analyses and refusal decisions must be retained for the periods set by law and produced promptly to the Banking Commission or the CTRF on request. During an inspection, an incomplete or missing file is treated as a lack of due diligence.

Training and internal organisation

Regulation No. 11-08 organises internal control: ongoing control, periodic control and the compliance function. The AML/CFT framework must be embedded in it, with a compliance officer who has real authority, regular reporting to senior management and the board, and training tailored to each business line. To position this function properly, read our guide to the compliance function in Algeria.

3. Sector-specific typologies and red flags

• Structured cash deposits, repeated across several branches or accounts, with no link to the declared business;
• Accounts of newly created companies that quickly receive large flows and immediately transfer them to third parties;
• Foreign trade transactions whose price, quantity or nature of goods look inconsistent (over-invoicing, under-invoicing, false declarations);
• Opaque ownership structures, nominees, or a beneficial owner who cannot be established from the CNRC register;
• Early loan repayments with funds of unexplained origin or by unrelated third parties;
• Dormant accounts suddenly reactivated, or recent accounts used for repeated transfers to the same platform;
• Transfers to virtual asset websites or platforms, IP addresses linked to the dark web, repeated small unexplained transfers, indicators listed in Guidelines No. 06-2025;
• A customer reluctant to explain the source of funds, or who changes behaviour as soon as supporting documents are requested.

4. Common mistakes

In the financial institutions we support or have observed, in Algeria and internationally, the same weaknesses recur:

• A theoretical risk classification: a risk map written for the inspector but disconnected from the actual customer ratings in the information system;
• A backlog of KYC files never remediated: new customers follow the procedure, but legacy files, including beneficial ownership, have never been brought up to standard;
• Generic alert scenarios: configured once and never recalibrated, they generate thousands of alerts closed without documented analysis;
• Defensive suspicious transaction reports: poorly reasoned and unsupported, they help neither the CTRF nor the bank;
• Incomplete screening: customers are screened, but not always beneficial owners, agents or payment counterparties;
• Isolated compliance: a compliance officer without resources or direct access to senior management, and business lines that see AML/CFT as an administrative burden.

5. How Hodemia Consulting supports banks and financial institutions

Hodemia Consulting, founded by Fayçal Lounes, brings Algerian banks nearly twenty years of regulatory compliance experience gained at EY in Luxembourg, San Francisco and London, then as Director of Regulatory & Compliance Services at KPMG in the Middle East. Our services:

• Compliance diagnostic (2 to 4 weeks): gap analysis against Regulation No. 24-03 and Instruction No. 04-2026, with a prioritised action plan. Learn about our compliance diagnostic approach;
• AML/CFT programme implementation and KYC remediation: risk mapping, four-parameter customer rating, procedures, review of the file backlog, calibration of alert scenarios;
• Compliance & Ethics training (1 day): modules tailored to branches, credit and foreign trade teams (see our training);
• Leadership & Compliance seminar (2 days): for executive committees and boards, who bear ultimate responsibility for the framework.

To discuss your situation, contact us.

Conclusion: from formal compliance to demonstrated effectiveness

The AML/CFT obligations for banks and financial institutions are now precisely defined, from amended Regulation No. 24-03 to Instruction No. 04-2026 on unified KYC. The challenge is no longer to write procedures but to prove they work: consistently rated customers, up-to-date files, analysed alerts, useful reports and committed senior management. Institutions that start this upgrade now will secure their correspondent relationships and approach the evaluation expected around 2029 with confidence. To revisit the fundamentals, read our complete guide to AML/CFT compliance in Algeria.

Fayçal Lounes

Founder of Hodemia Consulting

Nearly 20 years of international experience in regulatory compliance, risk and governance (EY in Luxembourg, San Francisco and London; Director, Regulatory & Compliance Services at KPMG Middle East). Certified coach, trainer and academic.