AML/CFT obligations for capital market participants in Algeria (2026)

A large subscription paid by a third party, securities bought and resold within days for no apparent reason, an investor who puts money into a crowdfunding project and then asks for repayment to a different account: capital markets also offer ways to move and launder funds. The AML/CFT obligations for capital market participants aim to ensure that every investor is identified, that the source of their funds is understood and that unusual transactions are detected and reported.

The Algerian market is still narrow, but it is opening up: initial public offerings, the growth of collective investment schemes, private equity and the arrival of crowdfunding platforms. This opening attracts new investors, including remote ones, and therefore new risks. Since Algeria left the FATF grey list on 19 June 2026, attention has shifted to how effective frameworks really are, including outside banks; the next mutual evaluation is expected around 2029.

1. Applicable texts and supervisory authority

Law No. 05-01 of 6 February 2005, amended by Law No. 23-01 of 7 February 2023 and supplemented by Law No. 25-10 of 24 July 2025, is the foundation. Its Article 10 bis 3 designates the Stock Exchange Operations Organisation and Surveillance Commission (COSOB) as the supervisor of stock exchange intermediaries, account keepers-custodians, collective investment schemes, the Algiers Stock Exchange, the central depository, private equity companies and crowdfunding platform operators. For a detailed analysis, read our article on Law 23-01 on money laundering in Algeria.

COSOB has published guidelines on customer due diligence for the prevention of and fight against money laundering and terrorist financing, available on the website of the stock exchange management company (SGBV). They are addressed to stock exchange intermediaries, account keepers-custodians, UCITS-type funds, the Algiers Stock Exchange, the central depository and private equity companies. They refer to Law No. 05-01 in a version predating the 2023 reform, so they must be read in light of the current provisions of the law, which prevail.

For crowdfunding, COSOB Regulation No. 23-01 of 12 April 2023, approved by order of 4 September 2023, sets the conditions for the licensing, operation and supervision of participatory investment advisers; the first platforms have since been licensed. Suspicious transaction reports go to the CTRF, which reports to the Ministry of Finance.

2. Key obligations

Risk classification

The guidelines require a risk profile for each client, updated as soon as something changes it, and client segmentation so that due diligence is proportionate. They cite as higher-risk factors non-resident clients, companies owned through nominees, complex ownership structures, links with non-compliant or sanctioned countries, non-face-to-face relationships and payments from unknown third parties. Simplified measures are possible for low risks, such as regulated institutions, listed companies or public administrations, but never where there is a suspicion. Also factor in the findings of the national and sectoral risk assessment provided for by Law No. 25-10.

Customer due diligence and beneficial owners

Every client, permanent or occasional, is identified and verified using reliable and independent sources, as are the powers of persons acting on their behalf and the identity of the beneficial owner. The guidelines set minimum data: for an individual, nationality, occupation, purpose of the relationship, income and source of funds; for a legal entity, ownership and control structure, directors, corporate purpose, income and how the account will operate. This information is recorded in a know-your-customer questionnaire signed by the client and updated every year, as well as after a significant transaction or a material change. The CNRC beneficial ownership register helps cross-check legal entities' declarations.

Politically exposed persons (PEPs) are high risk: enhanced due diligence and senior management approval to enter into or continue the relationship. Enhanced measures include understanding complex or unusually large transactions, obtaining the source of funds or wealth, more frequent monitoring and, where appropriate, a first payment made through another institution subject to similar standards. If due diligence cannot be completed, the account is not opened, the relationship is not established or is ended, and a suspicious transaction report is considered.

Suspicious transaction reporting to the CTRF

Each unusual transaction is examined; if doubt remains after asking for additional information, it is reported to the CTRF. The guidelines point out that a good-faith reporter is protected, even if the investigation leads nowhere, and that inadequate internal systems can themselves be sanctioned. Reports remain strictly confidential towards the client. Analysis of anomalies is centralised with an internal correspondent.

Asset freezing and targeted financial sanctions

Freezing measures provided for by law apply to both cash and securities accounts. In practice, clients, beneficial owners, authorised representatives and settlement counterparties must be screened against current sanctions lists, in particular UN Security Council lists, at onboarding and whenever lists are updated. The guidelines provide that a failure may lead to disciplinary proceedings.

Record keeping

KYC questionnaires, supporting documents, orders, trade confirmations, securities account statements and alert analyses must be kept for the legal retention period, so that each transaction can be reconstructed and requests from COSOB or the CTRF answered without delay.

Training and internal organisation

The guidelines make senior management responsible for overseeing the framework and internal control responsible for assessing how policies are applied and reporting deficiencies. COSOB can carry out desk-based and on-site inspections and refer matters to its disciplinary and arbitration chamber. In practice, appoint an identified AML/CFT correspondent, train front-office, back-office and custody teams, and document that training. Our guide to the compliance function in Algeria helps you position this role.

3. Sector-specific typologies and red flags

• funds deposited into a securities account followed by a quick withdrawal request, with little or no investment;
• closely spaced purchases and sales with no economic rationale, the client accepting losses or high fees;
• subscriptions or settlements made by third parties with no apparent link to the client;
• transfers of securities between accounts of different people without an identifiable counterparty;
• amounts invested out of line with the income or wealth declared in the KYC questionnaire;
• an opaque ownership structure, use of nominees or refusal to identify the beneficial owner;
• orders placed just before significant information about an issuer is published;
• on a crowdfunding platform: multiple investors sharing the same contact details, a project owner linked to the investors, a repayment request to a different account.

4. Common mistakes

Among mid-sized financial intermediaries, we see recurring weaknesses.

• Relying on the bank: the intermediary assumes the bank holding the cash account has already done the checks, whereas it remains responsible for its own due diligence.
• A KYC questionnaire completed once and for all, never updated, with no usable information on the source of funds.
• No transaction monitoring: orders are executed without alert scenarios or after-the-fact review.
• Confusing market abuse with money laundering: the two overlap but require separate analyses and reports.
• Internal guidelines that have not been updated, ignoring the changes brought by Law No. 23-01 and Law No. 25-10.
• For new players (funds, private equity, platforms), an AML/CFT framework designed after launch rather than when the offer is designed.

5. How Hodemia Consulting supports capital market participants

Fayçal Lounes, with nearly twenty years of regulatory compliance experience in Europe, the United States and the Middle East, supports intermediaries and institutional investors through:

• Compliance diagnostic (2 to 4 weeks): gaps between your practices, the amended law and COSOB's expectations, with a prioritised action plan. See our article on the compliance diagnostic.
• AML/CFT programme set-up and KYC remediation: risk mapping, KYC questionnaires, monitoring scenarios tailored to securities and platforms, sanctions screening, reporting workflow.
• Compliance & Ethics training (1 day) for front- and back-office teams. See our training courses.
• Leadership & Compliance seminar (2 days) for executives and boards of directors.

To discuss it, get in touch. Find the general framework in our guide to AML/CFT compliance in Algeria.

Conclusion: supporting market growth with a credible framework

The AML/CFT obligations for capital market participants rest on clear principles: a risk profile for each client, identification of the beneficial owner, an up-to-date KYC questionnaire, enhanced due diligence for PEPs, transaction monitoring, reporting to the CTRF and implementation of freezing measures. As the market opens to new investors and new products, COSOB and FATF assessors will look closely at the quality of these frameworks. Players who build them in from the design of their offers strengthen both their compliance and investor confidence.

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.