Algeria and the FATF Grey List: Understanding the Exit Plan and What It Means for Business

Introduction

In October 2024, the Financial Action Task Force (FATF) — the global standard-setter for anti-money laundering and counter-terrorism financing (AML/CTF) — added Algeria to its list of “Jurisdictions under Increased Monitoring,” commonly known as the grey list. The designation, announced alongside Angola, Cote d’Ivoire, and Lebanon, triggered an immediate cascade of practical business consequences: heightened due diligence requirements from international banks, more expensive trade finance, and added scrutiny of Algeria-linked transactions in global financial markets.

Then, in a significant development, the FATF’s February 2026 plenary made the initial determination that Algeria has substantially completed its action plan and warrants an on-site assessment — a critical milestone that puts Algeria one step away from exiting the grey list.

This article explains what the FATF grey list means, what Algeria has done to reach this point, how business operations are affected, and what the exit timeline now looks like.

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What the FATF Grey List Actually Is

The FATF grey list — formally titled “Jurisdictions under Increased Monitoring” — is distinct from, and less severe than, the FATF black list (formally: “High-Risk Jurisdictions subject to a Call for Action,” currently including North Korea and Iran). Being on the grey list does not mean Algeria is a high-risk jurisdiction for financial crimes — it means the country committed to address specific identified deficiencies in its AML/CTF framework within an agreed timeframe.

Grey-listed countries voluntarily commit to the remediation process in collaboration with FATF and the relevant regional body — in Algeria’s case, MENAFATF (Middle East and North Africa Financial Action Task Force). Countries are reviewed at each FATF plenary (held three times per year) on progress against their agreed action plans.

The practical business consequences of grey-listing are real but proportionate:

Correspondent banking: International banks maintaining correspondent relationships with Algerian banks must apply “enhanced due diligence” to Algeria-related transactions, adding cost and processing time to international wire transfers and trade finance.

Trade finance: Import/export transactions involving Algerian parties require more documentation and approval time, increasing the cost of international trade.

Foreign investment: Due diligence processes for investments involving Algeria-connected entities must include specific grey-list considerations. Some institutional investors have internal policies restricting investment in grey-listed jurisdictions.

Insurance: International credit and political risk insurance for Algeria-related transactions may face higher premiums or exclusions.

Reputational effect: Grey-listing carries a reputational cost for Algeria’s international image as a business destination, even when the technical deficiencies identified are relatively manageable.

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Algeria’s Specific Action Plan: Two Core Commitments

Algeria’s action plan under the FATF framework centers on two primary areas:

Area 1: Risk-based supervision for higher-risk sectors

Algeria committed to improving how it supervises financial institutions and designated non-financial businesses (DNFBs — real estate agents, lawyers, accountants, dealers in precious metals) for AML/CTF compliance:

• Implementing risk-based supervision methodologies
• Conducting more frequent and intensive inspections of higher-risk entities
• Applying effective, proportionate, and dissuasive sanctions when deficiencies are found
• Documenting and publishing supervision outcomes

Area 2: Beneficial ownership information

Algeria committed to establishing a legal and operational framework ensuring adequate, accurate, and up-to-date information on beneficial owners of legal entities:

• Creating a centralized register of beneficial ownership information
• Establishing verification mechanisms and sanctions for inaccurate information
• Making data accessible to competent authorities on a timely basis
• Covering all legal entity types including associations and partnerships

Additional requirements included enhancing suspicious transaction reporting, applying targeted financial sanctions for terrorism financing, and conducting oversight of the non-profit sector.

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The Breakthrough: February 2026 FATF Plenary

The FATF’s February 2026 plenary delivered the most significant update since Algeria’s grey-listing: the initial determination that Algeria has substantially completed its action plan and warrants an on-site assessment to verify implementation.

This means Algeria has demonstrated sufficient progress across all action plan items that FATF assessors believe the reforms are substantive. The on-site assessment will verify that:

• Implementation is underway and sustained (not just on paper)
• The necessary political commitment remains in place
• Reforms are producing operational results, not just regulatory frameworks

This is the penultimate step before grey list exit. Algeria reached this milestone in approximately 16 months from initial listing — a notably rapid timeline. For comparison, South Africa, Nigeria, Mozambique, and Burkina Faso — all removed from the grey list at the October 2025 plenary — had been listed for significantly longer periods.

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What Progress Has Been Made

The achievements that led to the February 2026 determination include:

• Adoption of new supervision procedures for financial institutions — the Bank of Algeria and insurance regulator issued updated risk-based supervision manuals
• Risk assessment completion for key higher-risk sectors including real estate, precious metals, and professional services
• Legal framework for beneficial ownership sanctions — new legislation established sanctions for breaches of beneficial ownership disclosure requirements
• Terrorism financing risk assessment of the non-profit sector
• Targeted financial sanctions framework for terrorism financing
• Law 25-10 (crypto ban) — eliminating an entire category of AML/CTF risk
• Law 25-11 — strengthening the data protection and processing framework

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The Exit Timeline: What Happens Next

With the February 2026 determination in hand, the exit path is clear:

Step 1 (Completed): Substantially complete the action plan — Done (February 2026)

Step 2 (Next): On-site assessment by FATF/MENAFATF assessors. This typically occurs within 3-6 months of the initial determination. Assessors will verify that reforms are operational, not just legislated.

Step 3: FATF plenary reviews the on-site assessment report and makes a final determination. If positive, Algeria is removed from the grey list.

Most likely exit timeline: The June 2026 or October 2026 FATF plenary. Algeria could exit the grey list within 2 years of initial listing — at the faster end of historical norms. This reflects the government’s genuine prioritization of the remediation process.

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Business Implications: Operating in Algeria Now

For businesses operating in or with Algeria, the trajectory is clearly positive, but grey-list obligations remain in effect until formal exit:

For Algerian banks: Continue investing in compliance programs, AML/CTF technology, and staffing. The on-site assessment will specifically examine whether banks are effectively implementing risk-based supervision — not just whether the rules exist on paper.

For multinational companies: Trade finance and international payment processes involving Algeria still require enhanced documentation. But the substantially-completed determination is a strong positive signal for investment committees evaluating Algeria exposure.

For investment decision-makers: The grey-listing risk factor is now time-limited with a visible exit date. Companies that invested in compliance capabilities during the grey-list period are well-positioned for the post-exit environment.

For fintech and payment companies: Processing payments to/from Algeria requires continued enhanced monitoring. But the upcoming exit will materially reduce correspondent banking friction and costs.

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The Crypto Ban and FATF: The Connection Explained

Law 25-10’s sweeping cryptocurrency ban (July 2025) must be understood in the FATF context. Cryptocurrency markets are among the highest-risk categories for AML/CTF violations — pseudonymous transactions, cross-border accessibility, and limited monitoring capability create obvious challenges.

By criminalizing crypto entirely, Algeria eliminated a significant AML/CTF risk category from its monitoring obligations — a blunt but effective approach. The crypto ban is therefore better understood as FATF remediation policy than technology policy.

This framing also suggests that the ban’s severity is linked to the grey-listing. Post-grey-list exit, the political and policy case for a more nuanced regulated approach to digital assets becomes viable.

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What Grey List Exit Means for Algeria’s Tech Ecosystem

The exit will have specific positive impacts:

Reduced banking friction: Fintech companies building international payment capabilities will face simpler correspondent banking requirements, enabling broader participation in global payment networks.

Increased investor confidence: Risk-sensitive institutional investors with grey-list restrictions will reconsider Algeria. The fintech sector, which has seen delayed investment decisions, should see renewed interest.

Banking API openness: Banks under compliance pressure have been conservative about opening APIs and extending banking-as-a-service. Post-exit, the banking sector posture toward fintech partnerships should become more collaborative.

Insurance and bonding normalization: Technology contracts requiring performance bonds and insurance — particularly government ICT procurement — will see improved pricing and availability.

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Sources

• FATF Jurisdictions under Increased Monitoring — February 2026
• FATF Plenary February 2026 Key Updates — ComplyAdvantage
• Country Updates FATF Plenary February 2026 — StudyAML
• FATF Plenary October 2025 Grey List Changes — AML Consultants
• FATF Grey List October 2025 — FATF-GAFI
• FATF Updates Grey List — Hogan Lovells
• Algeria Law 25-10 Crypto Ban — ZIGRAM
• Outcomes FATF Plenary February 2026 — FATF-GAFI