la connaissance du client pour prévenir fraude et blanchiment
Summary of KYC in Algeria’s Insurance Sector
In Algeria, the Know Your Client (KYC) process has emerged as a crucial instrument within the insurance industry, particularly aimed at enhancing measures against fraud and money laundering. This development was highlighted at a recent workshop in Algiers, where experts in the field addressed the implications, practices, and legal obligations related to KYC.
KYC has transitioned from a mere commercial necessity to a mandated legal requirement for insurance companies. This process involves the identification and verification of clients’ identities—especially those deemed high-risk—as well as an assessment of their financial situations and the origins of their funds. To implement KYC effectively, insurance companies leverage specialized databases, information systems, and artificial intelligence, all while adhering to data protection laws.
Youcef Benmicia, president of the Algerian Union of Insurance and Reinsurance Companies (UAR), emphasized that the sector has established a KYC framework as of late 2024. He pointed out that this initiative complies with legislation on personal data protection. A significant aspect of this effort is Instruction No. 1, issued by the Insurance Supervisory Commission on November 21, 2024, which mandates heightened vigilance measures concerning client interactions.
This instruction requires insurance companies to create clear policies for accepting or rejecting clients as part of the broader fight against money laundering and financing of terrorism. The KYC framework is also integrated into a wider regulatory framework, including Law 05-01, which focuses on preventing and combating money laundering and terrorism financing, as well as Executive Decree No. 24-242, which sets the standards for internal control programs within insurance firms.
Benmicia noted that this executive decree compels companies to develop risk maps and tailor their control mechanisms in response to identified threats. Moundji Maoui, a business law expert, underscored the advantages of a compliance function for insurance companies and advocated for accelerated digitalization and the establishment of interoperable databases to increase KYC effectiveness. He projections that the future of KYC will be heavily influenced by artificial intelligence and its various applications.
In summary, the KYC process in Algeria’s insurance sector plays a vital role in ensuring compliance with laws aimed at preventing illicit financial activities. As the industry navigates these new regulations, a more integrated and technologically advanced approach is essential for addressing compliance challenges effectively.
