Algeria blacklisted for European Union investments

Algeria is now on the list of ‘high-risk’ countries for money laundering and terrorist financing. In response, Algerian media outlets claimed that the European body is pursuing a smear campaign against their nation, fuelled by tensions with France and its growing ties with China, Russia and Turkey.

This position will have significant consequences for its trade relations with its major partners and with the member states of the European Union, which have been increasingly tense and confused in recent times. However, Algeria claims to have increased and developed its efforts to combat criminal activities related to money laundering and the financing of terrorist groups, and that these actions are not being taken into account by the Union.

Similarly, the national newspaper Al-Khobar highlighted that, despite this being a technical measure by Brussels to protect the European financial system, it ignores the numerous practical efforts made by the North African country, particularly commenting on how, since 2020, legal reforms have been carried out to improve transparency and combat illegal activities, which it has a history of. Specifically, these include the 2021 Law on the Prevention of Money Laundering and Terrorist Financing, which expanded the powers of financial intelligence bodies and strengthened the monitoring of funds. Another initiative was the 2022 creation of an independent national body to supervise finances, followed in 2023 by improved monitoring of capital movements to prevent evasion.

There are eight main effects that have been generated by this inclusion: the first is an increase in financial audits of transactions, where European institutions will play a more active role. The second is that procedures will be stricter and could also delay and complicate transactions. The third relates to how Algeria will become less attractive to foreign investment, both from Europe and other countries, due to the increased risks that the country will represent for capital. The fourth concerns the issue of financing, where, due to increased risks, it will become more difficult to access loans, international financing and business with banks. The fifth aspect revolves around international banking transactions and the lack of confidence and vulnerability of Algerian banks, obstacles that could hinder large-scale international trade. The sixth aspect addresses the impact of this announcement on Algeria's global reputation as a reliable trading and financial partner, as well as the functioning of its economic and diplomatic relations. The seventh aspect explains how inclusion on this list aims to create a need for countries to optimise their regulatory frameworks and comply with international standards, principles and laws, as well as to combat any problems that arise. The eighth and final issue concerns the new challenges that the Algerian banking sector will face, where it will have to streamline its databases and strengthen cooperation with international organisations.

This announcement comes after Algeria was placed on the Financial Action Task Force's grey list in October last year due to the lack of progress in its systems. It is also believed that there are political dimensions involved in these decisions, given the legal efforts that the Algerian sector has made in recent years.

In general, this classification will lead to increased financial requirements and longer transaction times, which will have broad economic and political effects in Algeria, to which the Algerian government will have to respond with reforms and effective measures. Although the geopolitical and economic motives behind this decision are being questioned, it could be seen as a tool to curb Algeria's regional ambitions in Africa and the Mediterranean. It remains to be seen how the dialogue and alliances will continue after this announcement.