Interview by Wassila Ould Hamouda

Economist and professor at the University of Algiers 3, specialized in finance, Mohamed Boukhari welcomes the decision taken by the public authorities to strengthen the means of struggle of the financial intelligence processing unit. The fight against money laundering, corruption and financial scourges is not specific to Algeria. It underlines the important role of financial institutions, in particular the Bank of Algeria and diplomacy in this fight.

The fight against money laundering and financial scourges is the workhorse of the public authorities. Don't you think that the resources deployed remain insufficient?

Money laundering and the financing of terrorism are hot topics all over the world and our country is no exception in view of the scandals that have shaken it in recent times. This is not new. According to Global Financial Integrity, the volume of illicit financial flows from Algeria to developed countries in 2015 ranged from $7.6 billion to $14.3 billion. On average, that's $11 billion, despite exchange controls imposed by the Bank of Algeria. Combating money laundering and the financing of terrorism is not an easy task because of the techniques used. The placement, stacking and integration of funds to mask their origin often overlap and the situation is largely complicated by two facilitating elements, banking havens and corporate service providers.

This complexity and the global scale of illicit flows have led to the establishment of extremely sophisticated mechanisms to combat this scourge. I would cite, as an example, the resolutions of the UN Security Council, the Financial Action Task Force (FATF) or the regional intelligence groups. In Algeria, we have the Financial Intelligence Processing Unit (CTRF) launched in 2005 and are a founding member in 2004 of the Financial Action Task Force of the Middle East and North Africa (GAFIMOAN). In 2005, the Bank of Algeria introduced a binding regulation for banks. This is Regulation No. 05-05 of 15 December 2005 on the prevention and fight against money laundering and the financing of terrorism.

Resources have been made available to the CTRF. What is its role and what are the constraints likely to hinder its operation?

Its main role is to collect and process reports of suspicion and transmit them to the courts if the facts are likely to be prosecuted. The CTRF can play its role if it has qualified and sufficient staff. This is unlikely given the limited number of its staff, 25 in all. Were they the most gifted they could do? In 2017, in its activity report, the FIU complained about the large number of transactions unrelated to money laundering. Recent developments such as Islamic finance, e-commerce, the dematerialization of exchanges or online declaration, are all challenges that complicate the proper accomplishment of its missions. The Minister's decision to support the FRTC with material and human resources is welcome. Nevertheless, other threats can seriously hamper the CTRF. The collection of suspicious reports depends on the quality of the information submitted by financial institutions. However, some studies point to a certain laxity of these establishments, particularly public ones, vis-à-vis Regulation 05-05 on money laundering. In such a case, the role of the Central Bank is decisive. Failures in international mechanisms are also a significant threat to the CTRF. For example, the definition of prior offences differs from country to country. Thus, when a country does not include all serious crimes as a predicate offence, money laundering stakeholders (e.g. banks) may justify not reporting suspicious activities by arguing that they cannot know with certainty whether the funds come from one of the specified offences. in the provisions of the anti-money laundering and anti-terrorism framework.

In such a case, should diplomacy contribute to strengthening the fight against financial scourges in an international framework?

The role of diplomacy is paramount, but the solution would be the establishment of bilateral agreements. This work is already being done by the CTRF, which has established memoranda of understanding and information exchange with counterpart cells in Africa, the Middle East, Europe and Asia, with more than 20 countries. On the other hand, it remains insufficient and deserves to be accelerated. Apart from the France, the CTRF has not yet signed an agreement with Algeria's main economic partners (China, the United States, Italy, Spain), while according to the press, the latter has become a privileged destination for real estate investments by politically exposed people, in particular some currently being prosecuted.

Added to this is the threat of time. Financial Action Task Force (FATF) standards require financial institutions to keep records of any transaction for at least five years. The more the CTRF procrastinates, the more funds will not have been laundered and the room for manoeuvre becomes thin. This leads us to consider the importance of monitoring, evaluation and transparency of the functioning of the FIU. This point seems to me to be central. It is in line with the provisions of the draft new constitution, which attaches paramount importance to transparency and good governance.