In July 2025, the European Parliament placed Algeria under the EU list of high-risk countries in money laundering and terrorism financing. This is the category of classified listings that require the application of enhanced due diligence to be used by EU banks and institutions when interacting with Algerian entities, in adherence to recommendations developed by the Financial Action Task Force (FATF).
The choice has been made on a technical basis which involved bilateral check-ups and visits to Algeria. This underscores shortcomings in Algeria on the administrations of anti-money laundering (AML) and counter-terrorism financing (CFT). The mutual evaluation report by the FATF in 2024 spoke ill of the poor supervision in the country, poor coordination of the law enforcers, as well as ineffective national cooperation with the international organisations.
The European Commission has threatened to place Algeria on the blacklist along with other countries such as Iran and North Korea unless the country hastens its reforms- further imposing even more restraints on the financial exchanges.
Security Concerns Behind The Blacklisting
Terrorism Financing Risks
Being located at the interchange between North and Sub-Saharan African territories, Algeria becomes targeted by regional criminal groups as well as networks of money related to terrorism financing. According to the reports of the FATF and EU, the risk attributes poor tracking of the activities of NGOs, ageing laws, and financial intelligence collection.
Such issues were reinforced following the case of the U.S. Office of Foreign Assets Control (OFAC) sanctioned El Baraka, an Algerian NGO that is accused of funding Hamas and acting in the refugee camps in Tindouf. This case brought doubts to the outside world regarding the capability of Algeria in preventing terrorist financing in the territory.
Economic Vulnerabilities And Informal Finance
Algeria’s financial system suffers from structural fragilities. A flourishing parallel market—locally called “le Square”—fuels unmonitored cash flow and hampers government oversight. High inflation and a lack of trust in banking institutions lead many businesses and citizens to operate outside formal financial channels.
The government’s pledge to reform this market remains largely unfulfilled. Any strategies aimed at centralizing the process of currency exchange and implementing AML measures have been put to hold, therefore, the extent of the efforts devoted by Algeria to FATF standards remains convened.
In Algeria, the parliament has criticized the Finance Minister Abdelkrim Boulzard during a parliamentary session because he has not reacted effectively to the international requirement to practice transparency. The fact that it is alleged that there has been a lack of administrative action and that financial policymaking is clouded in secrecy does cast doubts on the very process of reform.
Political Dimensions And Allegations Of External Influence
Suspicion Of Geopolitical Motives
Upon questioning the neutrality of the EU stand, Algerian officials and local media are inclined to believe that the move has a political angle as speculated to be driven by the political differences set to exist between the EU and European nations, especially France. The growing strategic relationship between Algeria and Russia, China, and Turkey seems to displace the EU foreign policy interests hence attracting criticism that the blacklisting has nothing to do with security but all about politics.
Such suspicions have been exaggerated by the vocal opposition to some of the EU stands in the regional conflicts where Algeria has been criticising the European reaction to the Israel Gaza crisis. The existence of financial regulations can be seen as a mechanism of using power over the non-aligned states, sometimes as an argument of some Algerian analysts.
Algeria’s Legal Reforms Since 2020
To justify its record, the government points to a number of new reforms, enactment of a law on money laundering and terrorism financing in 2021, creation of a national supervisory body in 2022, and greater restrictions on capital flows in 2023. Authorities say such measures are indicators of international practice adherence, although they admit that the measures have not been fully enforced.
Algeria claims that it has assisted technical missions of FATF and EU and should be rewarded for the progress rather than be punished based on the difficulties prevalent in developing economies.
Regional And International Implications
Economic And Trade Consequences
The EU’s classification threatens to chill investment in Algeria. The companies that might forgo business operations with Algerian firms include banks and corporations that will fear the increase in the cost of compliance and the reputational risk. Trade with EU member states which is already subject to political tensions may be complicated even more.
The blacklisting is also denting Algeria’s dream of becoming a regional economic hub in North Africa. The uncertainty in its regulatory credibility and financial transparency is likely to influence or affect ongoing negotiations that it has with African and Middle Eastern partners.
Africa And Global Standards Enforcement
The now updated EU high-risk list does contain Algeria and also a number of countries located in Africa. Whereas countries such as Senegal and Uganda got off the list lately having enacted reforms, Algeria is among those that found it hard to comply with FATF standards. According to critics, the measure by the EU has undue effects on the economies of the Global South.
However, the EU authorities claim that their approach is objective and only limited to FATF results. The ruling of Algeria indicates its misconduct even after years of negotiations and watchdogging.
Algeria’s Response And Reform Agenda
Official Reaction And Immediate Steps
In response to the EU’s decision, Algeria’s cabinet convened an emergency session in early July 2025. Discussions focused on fast-tracking legislative changes, boosting inter-agency coordination, and accelerating implementation of AML/CFT reforms.
Government spokespersons stated that Algeria aims to exit the FATF grey list by early 2026. Measures under consideration include closing “le Square,” modernizing banking systems, and improving financial intelligence operations.
President Abdelmadjid Tebboune is reportedly prioritizing the issue ahead of the 2026 elections, hoping to restore international confidence in Algeria’s economy.
Institutional And Practical Challenges
Despite stated commitments, Algeria faces entrenched obstacles. Many businesses depend on cash-based transactions, and public trust in banks remains low. Corruption within regulatory bodies and political interference further complicate compliance efforts.
The challenge is not only legal but structural. Reforming Algeria’s financial system requires a shift in political culture, institutional independence, and sustained investment in capacity building.
Expert Perspectives And International Reactions
Laurence Trochu, a member of the European Parliament from the European Conservatives and Reformists group, has spoken in favor of Algeria’s inclusion on the high-risk list. She argues that “enhanced vigilance is necessary to ensure European security and uphold financial integrity.”
In an interview with France 24, financial analyst Yasmine Benkhelifa said,
“Algeria’s blacklisting reflects real vulnerabilities but also geopolitical tensions. The country must demonstrate concrete reforms to regain trust.”
Trochu also emphasized the importance of continued diplomatic engagement to encourage Algeria’s compliance rather than isolate it.
🇪🇺 🇩🇿 URGENT | Le Parlement européen a voté aujourd’hui la validation de l’ajout de l’#Algérie sur la liste des « pays à haut risque en matière de #blanchiment d’argent et de financement du #terrorisme. » pic.twitter.com/QVUPaYdHlW
— La Revue Afrique (@larevueafrique) July 10, 2025
Balancing Security And Sovereignty
The case of Algeria poses more general issues of international security agendas and national self-determination. As much as the EU and FATF claim to have a technical and evidence-based process, the situation of external coercion or bias still exists in the senses of perceptions.
Algerian officials claim that compliance standards are inappropriate to punish emerging economies due to imposing their standards, without sufficient measures to implement them, that have been constructed by richer nations. Those who do not get blacklisted perceive it as a wake-up call that needs immediate reforming.
This twin discourse of coercion externally vs. accountability internally determines the kind of response given by Algeria as well as the discourse spoken by people in Algeria.
The Road Ahead For Algeria And The EU
The fact that Algeria has found its way on the list of the high-priority countries of the EU is a severe blow to the diplomatic relations, at the same time being an opportunity that could trigger a change. The label highlights deficiencies in the control of money and police, but it also creates a possibility to modernize the institutions and restore confidence.
A lot will hinge on the expediency and efficacy in which Algeria will be able to execute its reforms. That involves closing the informal currency market, introducing electronic monitoring of transactions, and keeping the financial institutions in line.
In the case of the EU, the focus of stability of the application of risk standards and the mindful nature of political sensitivities involved. Coupled with sustainable results, positive working alliances and not revengeful seclusion can be effective.
Close attention will be paid to whether Algeria can undo the blacklisting and have a better international reputation. The situation goes beyond compliance, there is also at stake sovereignty, regional weight of power and the future structure of finance policies in North Africa.
