VZCZCXYZ0000
RR RUEHWEB

DE RUEHAS #0774/01 1901558
ZNR UUUUU ZZH
R 081558Z JUL 08
FM AMEMBASSY ALGIERS
TO RUEHC/SECSTATE WASHDC 6087
INFO RUEHAK/AMEMBASSY ANKARA 0067
RUEHEG/AMEMBASSY CAIRO 1051
RUEHFR/AMEMBASSY PARIS 2795
RHMFISS/HQ USEUCOM VAIHINGEN GE
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEAWJB/DEPT OF JUSTICE WASHDC
RUEATRS/DEPT OF TREASURY WASHDC

UNCLAS ALGIERS 000774 
 
SENSITIVE 
SIPDIS 
 
ANKARA PASS TO DOJ SHAYDEN 
CAIRO PASS TO TREAS OTA JROWE 
JUSTICE PASS TO JSILVERWOOD 
STATE FOR INL AALTON AND NEA/MAG 
TREASURY PASS TO OTA MRUFFNER, CCORREA, LDUBIEL, AND CKELLY 
USEUCOM PASS TO OTA JANTONOVICH 
 
E.O. 12958: N/A 
TAGS: EFIN ECIN KTFN KCRM KJUS PREL PTER ECON AG
SUBJECT: ENHANCING ALGERIA'S ANTI-MONEY LAUNDERING CAPACITY 
 
REF: A. 06 ALGIERS 1749 
     ¶B. 07 ALGIERS 473 
 
¶1. (SBU) SUMMARY.  Algeria's still nascent financial 
intelligence unit is ready to cooperate on a technical 
assistance program to be offered through the Office of 
Technical Assistance (OTA) at the U.S. Department of Treasury 
in the area of anti-money laundering and terrorist finance 
(AML/TF).  Board members of the Cellule de Traitment du 
Renseignement Financier (CTRF) told visiting OTA Regional 
Advisor for Enforcement Jerry Rowe that CTRF wants technical 
assistance in three key areas: training of new financial 
intelligence analysts, the development of a data base, and 
the coordination of various actors within the Algerian 
government involved in AML/TF efforts.  CTRF is trying to 
expand its board and hire new analysts, and sees this 
technical assistance project as opportune given the fact that 
Algeria's AML program will be reviewed in January 2008 by the 
Middle East and North Africa Financial Action Task Force 
(MENA-FATF).  CTRF faces stiff challenges both internally and 
externally, primarily from a lack of staffing and a lack of 
interoperability with Algerian law enforcement agencies. 
Moreover, half of the financial transactions in Algeria are 
conducted on the informal economy, outside the purview of 
strict banking regulations and government oversight.  But 
CTRF board members were confident that they can grow the 
agency and use regulatory changes to remove some of the legal 
obstacles that limit their work with law enforcement.  The 
technical assistance package to be offered to the Algerians 
will likely be in the form of an OTA intermittent advisor at 
the CTRF who will also act as project manager for training 
and other assistance.  The advisor would also work in 
collaboration with other OTA teams already on the ground in 
Algeria as well as with any upcoming Department of Justice or 
other programming concentrating on what the Algerians 
classify as "new crimes."  OTA estimates its advisor for the 
CTRF may be in place by October 2008, and we will begin 
negotiating terms of reference immediately.  END SUMMARY. 
 
¶2. (SBU) OTA Regional Advisor Rowe met in early July with 
CTRF board members and other stakeholders as a preliminary 
step toward establishing an intermittent advisor position at 
the CTRF to bolster the organization's AML/TF capacity.  This 
technical assistance package stems from a request from the 
CTRF President Abdelmadjid Amghar (ref A) and the report of a 
Financial Systems Assessment Team (FSAT) visit in February 
2007 (ref B).  In addition to the CTRF board members, Rowe 
met with the Algerian Professional Bankers Association 
(ABEF), the OTA Tax Team intermittent advisor, and Embassy 
officials involved in future technical assistance programs in 
what the Algerian Ministry of Justice labels "new crimes," 
which include aspects of money laundering and terrorist 
finance.  The CTRF board members were very receptive to 
Rowe's presentation, and told us that their priorities for 
technical assistance were: the training of new financial 
intelligence analysts; development of a data base to track 
and analyze suspicious financial transactions and suspected 
wrong-doers; and coordination of the government and private 
sector actors involved in the fight against money laundering 
and terrorist financing. 
 
SMALL, BUT COMMITTED 
-------------------- 
 
¶3. (SBU) Established in 2004, CTRF remains a small, nascent 
organization housed at the Ministry of Finance but 
independent from all ministries (ref B).  CTRF is comprised 
of six board members: CTRF President Amghar and five drawn 
from other agencies for four-year terms.  The primary purpose 
of the CTRF is to receive declarations of suspicious 
transactions from Algerian banks and other entities, analyze 
information related to possible money laundering or terrorist 
finance violations, and refer cases to magistrates for 
further investigation and possible prosecution.  Four years 
into its legal existence, however, the entire organization 
still consists of the board and an administrative officer. 
Thus, each board member personally receives and analyzes 
suspicious transaction declarations and then confers with 
colleagues to make referrals to magistrates (referrals are 
made only from the CTRF board, convened as a whole).  The 
agency recently tried to hire several financial intelligence 
analysts, but found no qualified candidates at the salary 
offered.  Board members Mohamed Benhalla and Abelkrim Djadi, 
both of whom are magistrates, told us that CTRF is preparing 
to add a board member from the Gendarmerie, and rotate 
experienced analysts from other government agencies through 
CTRF as well as help train new college graduates.  CTRF would 
then have four functional divisions: investigations, 
documentation, information technology, and international 
cooperation.  Djadi told us that Algeria will be reviewed in 
January 2009 by MENA-FATF, and he hopes to have CTRF well 
staffed by then. 
 
INFORMATION FLOW: ONE WAY ONLY 
------------------------------ 
 
¶4. (SBU) One of the chief impediments to CTRF's effective 
operation lies in the limits of its statutory authority to 
share information.  According to board members Benhalla and 
Djadi, CTRF cannot conduct field investigations but is 
limited to "administrative" investigations and analyses based 
on the data it receives from banks and other sources.  They 
said that CTRF may solicit and receive information from 
Algerian law enforcement agencies, as well as through 
cooperative agreements with FIUs in other countries. 
However, CTRF is not authorized to share its information with 
Algerian law enforcement, even if its information regarding 
financial transactions would be useful to an ongoing criminal 
investigation.  Instead, the CTRF board may give its findings 
to magistrates only in the form of a referral for 
prosecution.  The board members told us that because of this 
one-way exchange of information and a sense of distrust it 
foments, they believe law enforcement agencies are not always 
forthright in providing CTRF with information gleaned in the 
course of active investigations.  The board members noted 
that CTRF has formal legal frameworks for cooperation with 
customs and with the tax administration, and informal 
agreements with several law enforcement agencies.  They 
admitted the cooperation agreements were limited to the 
method of ensuring the security of information, rather than 
regarding the type or scope of information to be shared. 
 
SUSPICIOUS TRANSACTIONS: CASH AND CARRY 
--------------------------------------- 
 
¶5. (SBU) Djadi told us that since its inception CTRF has 
received about 170 suspicious transaction declarations from 
Algerian banks.  He admitted that this number is relatively 
low given the comprehensive nature of Algeria's anti-money 
laundering statutes and central bank requirements that all 
banks adopt AML strategies and that bank examiners report 
suspicious transactions they discover to CTRF.  (Note: 
Algeria adopted an "all crimes" approach to money laundering, 
meaning any serious criminal offense may be a predicate 
offense to the charge of money laundering, versus a list of 
specific crimes.  End note.)  He blamed the low reporting 
figure on two factors: a lack of public awareness by bank 
employees and other professionals, and the fact that a 
significant percentage of Algerian financial transactions are 
done in cash and thus lie outside the purview of the 
otherwise stringent reporting requirements. 
 
¶6. (SBU) Both Djadi and Banking Association Director 
Abderramane Benkhalfa estimated that up to 50 percent of 
financial transactions in Algeria are done in cash.  The CTRF 
board members said that real estate transactions are the most 
common method by which financial transactions evade scrutiny 
by government regulators, because buyers and sellers 
routinely undervalue their deals, and the agents, lawyers and 
notaries involved in recording the transactions simply 
document what the parties agree to without verifying or 
questioning the substance of the transactions.  Accordingly, 
real estate is the most common avenue for the investment of 
criminal proceeds in Algeria, the board members said. 
According to CTRF board member Benhalla, the tax 
administration has the legal authority to purchase a property 
for 10 percent more than the reported value of the 
transaction if it suspects fraud in the recording of a sale. 
Such legal action would serve as a deterrent to those who 
would undervalue their property purchases by greater than 10 
percent, and open the door to tax evasion and AML charges. 
But, Benhalla said, the provision has never been invoked. 
 
¶7. (SBU) Both the CTRF board members and the representatives 
of the Bankers Association described proposals to impose a 
statutory limit on the amount of money that may be transacted 
in cash in Algeria.  The Bankers Association has proposed an 
8,000 Euro cash limit on any consumer or business 
transaction, beyond which a financial instrument (check, 
electronic transfer, etc.) must be used.  CTRF said that the 
current, much lower limit is not enforced, and Benkhalfa from 
the Bankers Association said that individual banks currently 
set their own limits for the receipt and payment of 
transactions in cash.  CTRF board members said they support a 
provision to exempt certain market transactions from the cash 
limit, such as the sale of fruits, vegetables, fish and meat. 
 
COMMENT: GOOD TIMING 
-------------------- 
 
¶8. (SBU) The timing is opportune to launch an AML/TF 
technical assistance program in Algeria based at CTRF.  As 
the organization grows its staff, we can assist in its 
training at the outset, enhancing compliance and 
interoperability with international standards and best 
practices.  This will help Algeria join the Egmont Group of 
cooperating FIUs.  Moreover, OTA Enforcement has experience 
assisting FIUs in regulatory drafting and interagency 
agreements to enhance cooperation with law enforcement, and 
in preparing for FATF reviews, both of which will be 
priorities for CTRF within the next year.  An OTA advisor at 
CTRF can also complement existing OTA teams at the central 
bank and the tax administration, as well as the "new crimes" 
training program currently being discussed with OPDAT and 
State INL.  Joint training efforts across agencies are also 
foreseeable.  There will undoubtedly be challenges: CTRF is 
still underdeveloped and relatively disconnected from law 
enforcement, and the bankers, for example, showed resistance 
to the idea of training side-by-side with CTRF and other 
government regulators.  But the CTRF and other actors are 
eager to study and adopt best practices in the area of 
AML/TF, and OTA engagement can capitalize on their enthusiasm. 
 
¶9. (U) This cable was coordinated and cleared with OTA 
Regional Enforcement Office, Cairo. 
DAUGHTON