REGULAT IONS

2011

REGULATION 11-01 OF MARCH 24TH, 2011 RELATING TO CREATION OF A BANKNOTE OF TWO THOUSAND (2000) ALGERIAN DINARS

The Governor of the Bank of Algeria,

Whereas Order 03-11 of Jumaada al-THaany 27th, 1424 corresponding to August 26th, 2003 as amended and completed, relating to Money and Credit, namely its Articles 38, 62 (paragraph a), 63 and 64;

Whereas the Presidential Decree of Raby` al-awal 10th, 1422 corresponding to June 2nd, 2001 relating to appointment of the Governor and Vice-Governors of the Bank of Algeria;

Whereas the Presidential Decree of Raby` al-awal 10th, 1422 corresponding to June 2nd, 2001 relating to appointment of Members of the Executive Board of the Bank of Algeria;

Whereas the Presidential Decree of Sha`baan 26th, 1423, corresponding to November 2nd, 2002 relating to appointment of a Member of the Executive Board of the Bank of Algeria;

Whereas the Presidential Decree of Thw al-Qi`dah 24th, 1424 corresponding to January 14th, 2004 relating to appointment of Members of the Council of Money and Credit of the Bank of Algeria;

Whereas the Presidential Decree of Jumaada al-awal 5th, 1427 corresponding to June 1st, 2006 relating to appointment of a Vice-governor of the Bank of Algeria;

Further to the Resolution of the Council of Money and Credit of the Bank of Algeria of Raby` al-THaany 19th, 1432 corresponding to March 24th, 2011;

promulgates the Regulation the content of which follows:

Article 1: The Bank of Algeria shall create a two thousand (2000) Algerian Dinar banknote.

Article 2: The general characteristics of the two thousand (2000) Algerian Dinar banknote are as follows:

. Dimension: 160 mm x 71,7 mm

. Theme: science, technology and endogenous development

. Watermark: Effigy of Emir Abdelkader

.General tonality: greenish blue.

Article 3: The new banknote shall be put into circulation concomitantly with the banknotes currently in circulation

Article 4: The special peculiarities, namely the detailed technical characteristics and the date of putting into circulation of such a banknote shall be determined by regulation.

Article 5: This Regulation shall be published in the “Journal Officiel” of the People’s Democratic Republic of Algeria.

The Governor Mohammed LAKSACI

REGULATION 11-02 OF MARCH 24TH, 2011 RELATING TO THE ISSUING AND PUTTING INTO CIRCULATION OF A TWO THOUSAND (2000) ALGERIAN DINAR BANKNOTE

The Governor of the Bank of Algeria,

Whereas Order 03-11 of Jumaada al-Thaany 27th, 1424 corresponding to August 26th, 2003 as amended and completed, relating to Money and Credit, namely its Articles 38, 62 (paragraph a), 63 and 64;

Whereas the Presidential Decree of Raby` al-awal 10th, 1422 corresponding to June 2nd, 2001 relating to appointment of the Governor and Vice-Governors of the Bank of Algeria;

Whereas the Presidential Decree of Raby` al-awal 10th, 1422 corresponding to June 2nd, 2001 relating to appointment of Members of the Executive Board of the Bank of Algeria;

Whereas the Presidential Decree of Sha`baan 26th, 1423, corresponding to November 2nd, 2002 relating to appointment of a Member of the Executive Board of the Bank of Algeria;

Whereas the Presidential Decree of Thw al-Qi`dah 24th, 1424 corresponding to January 14th, 2004 relating to appointment of Members of the Council of Money and Credit of the Bank of Algeria;

Whereas the Presidential Decree of Jumaada al-awal 5th, 1427 corresponding to June 1st, 2006 relating to appointment of a Vice-governor of the Bank of Algeria;

Whereas Regulation 11-01 of Rebie Ethani 19th, 1432 corresponding to March 24th, 2011 relating to creation of a two thousand (2000) Algerian Dinar banknote;

Further to the Resolution of the Council of Money and Credit of the Bank of Algeria of Raby` al-Thaany 19th, 1432 corresponding to March 24th, 2011

promulgates the Regulation the content of which follows: Article 1: Under Regulation 11-01 of Raby` al-THaany 19th, 1432 corresponding to March 24th, 2011 relating to creation of a two thousand (2000) Algerian Dinar banknote, the Bank of Algeria shall issue a two thousand (2000) Algerian Dinar banknote, the putting into circulation of which shall be carried out as from April 28th, 2011.

Article 2: The special peculiarities namely the detailed technical characteristics of such banknote shall be set as follows:

1) DIMENSION: Overall: 160 mm x 71,7 mm, Vignette: 120 mm x 61,7 mm

2) TONALITY: Greenish blue

3) PAPER: watermark, of banknote type, colored in light blue on the whole

4) DESCRIPTION: a. General theme: Science technology and endogenous development b. Front side: in (3) three juxtaposed colours.

1. Security background: consisting of geometrical figures, guilloche, micro- prints, graphical numismatic.

The security background shall cover the vignette and the watermarked strip

2. Vignette: science and technology.

3. Pieces of writing in Arabic:

“Bank of Algeria”

“Two thousand Dinars”

4. Figures: “2000” located vertically on the right side of the vignette and horizontally on the left bottom of the vignette.

5. Signatures

6. Figures

7. Date c. Back side: in (3) three juxtaposed colours.

1. Security background: consisting of geometrical figures, guilloche, micro- prints, graphical numismatic.

The security background shall cover the vignette and the watermarked strip

2. Vignette: vectors of endogenous development.

3. Pieces of writing in Arabic:

“Bank of Algeria”

“Two thousand Dinars”

4. Figures: “2000” located vertically on the left side of the banknote and in a guilloche, on the bottom of the watermarked strip.

5. Piece of writing in Arabic “Article 197 of the Criminal Code punishes the forgers”

5) WATERMARK: Continuous, inside a vertical strip located on the left side of the banknote on the front side and on the back side on the right side.

The watermark shall represent the effigy of Emir Abdelkader.

6) Security thread- a “window thread” type, micro-print, appearing on the left central section of the front side, in silvery alternating light and dark areas.

The thread can be seen through transparency on either side.

7) HOLOGRAM: a hologram with a width of 13 mm, of “lead” type shall be affixed on the left of the front side. It is represented continuously over the whole width of the banknote from top to bottom. a) as seen from one angle: . Pieces in writing “Bank” ( in Arabic), . Effigy of Emir Abdelkader looking to the left, . Pieces of writing “Algeria” (in Arabic), . Effigy of Jughurta looking to the left.

b) as seen from another angle: . Pieces of writing “Algeria” (in Arabic), .Effigy of Jughurta looking to the right, . Pieces in writing “Bank” ( in Arabic), . Effigy of Emir Abdelkader looking to the right.

On the right side of the hologram, figures “2000” repeated continuously.

Article 3: This Regulation shall be published in the “Journal Officiel” of the People’s Democratic Republic of Algeria.

The Governor Mohammed LAKSACI

REGULATION 11-03 OF MAY 24TH, 2011 RELATING TO OVERSIGHT OF INTERBANK RISKS

The Governor of the Bank of Algeria,

Whereas Order 03-11 of Jumaada al-Thaany 27th, 1424 corresponding to August 26th, 2003 as amended and completed, relating to Money and Credit, namely its Article 62;

Whereas the Presidential Decree of Raby` al-awal 10th, 1422 corresponding to June 2nd, 2001 relating to appointment of the Governor and Vice-Governors of the Bank of Algeria;

Whereas the Presidential Decree of Raby` al-awal 10th, 1422 corresponding to June 2nd, 2001 relating to appointment of Members of the Executive Board of the Bank of Algeria;

Whereas the Presidential Decree of Sha`baan 26th, 1423, corresponding to November 2nd, 2002 relating to appointment of a Member of the Executive Board of the Bank of Algeria;

Whereas the Presidential Decree of Thw al-Qi`dah 24th, 1424 corresponding to January 14th, 2004 relating to appointment of Members of the Council of Money and Credit of the Bank of Algeria;

Whereas the Presidential Decree of Jumaada al-awal 5th, 1427 corresponding to June 1st, 2006 relating to appointment of a Vice-governor of the Bank of Algeria;

Whereas Regulation 02-03 of Ramadhaan 9th, 1423 corresponding to November 14th 2002 relating to internal control of Banks and Financial Institutions;

Whereas Regulation 09-04 of Awwal Sha`baan, 1430 corresponding to July 23rd, 2009 relating to bank accounts chart and accounting rules applicable to Banks and Financial Institutions;

Whereas Regulation 09-05 of Shawwal 29th, 1430 corresponding to October 18th, 2009 relating to establishment and publication of financial statements of Banks and Financial Institutions;

Whereas Regulation 09-08 of Muharram 12th, 1431 corresponding to December 29th, 2009 relating to assessment and accounting rules of financial instruments by Banks and Financial Institutions;

Further to the Resolution of the Council of Money and Credit of May 24th, 2011 promulgates the Regulation the content of which follows:

Article 1: Banks and Financial Institutions shall have under the conditions set by this Regulation an internal oversight system for the distribution of their outstanding interbank loans and borrowings, namely those made on the Money Market.

Article 2: Banks and Financial Institutions shall fix for each counterpart the maximum amount of loans granted and obtained with bank counterparts.

Such amounts shall be determined under conditions which ensure a distribution of investments made and financings obtained that comply with decisions of the legislative body relating to risk taking and liquidity management.

Limits set for each counterpart shall be subject to a periodic reviewing.

Article 3: When a bank counterpart has exclusive control over one or several other bank counterparts, the group thus constituted shall be considered as one and the same counterpart for compliance with the limits set forth in Article 2 above.

Shall also be considered as same counterpart Bank counterparts that are bound together by links such that if one meets financial problems the other or all the others will face repayment difficulties.

Article 4: Banks and Financial Institutions shall set up:

- recording and processing information system allowing to know for each counterpart the amount of loans granted and loans contracted.

- devices for monitoring limits set for each counterpart;

- procedures to inform executive and legislative bodies about compliance with such limits.

Article 5: This Regulation shall be published in the “Journal Officiel” of the People’s Democratic Republic of Algeria.

The Governor Mohammed LAKSACI

REGULATION 11-04 OF MAY 24TH, 2011 RELATING TO IDENTIFICATION, MEASUREMENT, MANAGEMENT AND CONTROL OF LIQUIDITY RISK

The Governor of the Bank of Algeria,

Whereas Order 03-11 of Jumaada al-Thaany 27th, 1424 corresponding to August 26th, 2003, as amended and completed, relating to Money and Credit, namely its Articles 62 and 97;

Whereas the Presidential Decree of Raby` al-awal 10th, 1422 corresponding to June 2nd, 2001 relating to appointment of the Governor and Vice-Governors of the Bank of Algeria;

Whereas the Presidential Decree of Raby` al-awal 10th, 1422 corresponding to June 2nd, 2001 relating to appointment of Members of the Executive Board of the Bank of Algeria;

Whereas the Presidential Decree of Sha`baan 26th, 1423, corresponding to November 2nd, 2002 relating to appointment of a Member of the Executive Board of the Bank of Algeria;

Whereas the Presidential Decree of Thw al-Qi`dah 24th, 1424 corresponding to January 14th, 2004 relating to appointment of Members of the Council of Money and Credit of the Bank of Algeria;

Whereas the Presidential Decree of Jumaada al-awal 5th, 1427 corresponding to June 1st, 2006 relating to appointment of a Vice-governor of the Bank of Algeria;

Whereas Regulation 02-03 of Ramadhaan 9th, 1423 corresponding to November 14th 2002 relating to internal control of Banks and Financial Institutions;

Whereas Regulation 09-04 of Awwal Sha`baan, 1430 corresponding to July 23rd, 2009 relating to bank accounts chart and accounting rules applicable to Banks and Financial Institutions;

Whereas Regulation 09-05 of Shawwal 29th, 1430 corresponding to October 18th, 2009 relating to establishment and publication of financial statements of Banks and Financial Institutions;

Whereas Regulation 09-08 of Muharram12th, 1431 corresponding to December 29th, 2009 relating to assessment and accounting rules of financial instruments by Banks and Financial Institutions;

Whereas Regulation 11-03 of Jumaada al-Thaany 21st, 1432 corresponding to Mai 24th, 2011 relating to inter-bank risks oversight;

Further to the Resolution of the Council of Money and Credit of May 24th, 2011

promulgates the Regulation the content of which follows:

Article 1: Banks and Financial Institutions shall be compelled to set up under conditions provided for in the following articles a mechanism for the identification, measurement, analysis and management of liquidity risk. The latter shall be defined as the risk of not being able to cope with its commitments or not being able to unravel or compensate a position owing to the Market situation within a set deadline and at reasonable cost.

Article 2: Banks and Financial Institutions shall:

- have effectively and at all times sufficient liquidity to meet their commitments as they become due, through a stock of liquid assets;

- seek to ensure a sufficient diversification of their financing resources per amount, per maturity and per counterpart;

- regularly test borrowing opportunities at their disposal with their counterparts, both in normal condition and in crisis situation.

Article 3: Banks and Financial Institutions shall be compelled to respect a ratio between from one hand the sum of assets available and marketable in short term and financing commitments received from banks and on the other hand the sum of short term sight liabilities and commitments granted. Such ratio shall be called minimum coefficient of liquidity. Its components and terms of establishment shall be defined by Instruction from the Bank of Algeria.

Banks and Financial Institutions shall at all time present a coefficient of liquidity at least equal to 100%.

Article 4: At the end of each quarter, Banks and Financial Institutions shall provide the Bank of Algeria:

- the minimum liquidity ratio of the coming month and that of each of the two (02) last months of the past quarter;

- a liquidity ratio called “monitoring ratio” for a period of three (03) months following the closing date.

The Banking Commission may request Banks and Financial Institutions to calculate the liquidity ratio for other dates.

Article 5: Elements of calculating liquidity ratios shall be taken from accountancy of Banks and Financial Institutions accounting.

If difficulties arise in the calculation of the liquidity ratios for each of the last two (02) months of the last quarter, Banks and Financial Institutions may temporary use statistical methods of calculation on condition that such terms are transmitted to the Bank of Algeria and the “Banking Commission” giving its consent.

Article 6: The Banking Commission may authorize a Bank or Financial Institution to temporarily derogate the provisions of the present Regulation.

In such case, it shall fix the concerned institution a delay to settle its situation.

Article 7: Banks and Financial Institutions establish a statement called “statement of projected cash flow” allowing for a weekly monitoring at least of their liquidity position including new transactions.

Such statement shall be established as from their one week cash flow forecasts.

Article 8: Banks and Financial Institutions shall determine the characteristics and assumptions on which their forecasts are based. Article 9: Banks and Financial Institutions shall establish and detail their one week forecasts of gross flow resulting from:

- transaction with the Bank of Algeria;

- interbank loans and borrowings;

- purchase and sale operations, reverse repos and repurchase of bills representing claims;

- financial bills issued;

- clients withdrawals and deposits;

- clients loans and borrowings;

- commitments granted or received;

- market transaction other than those reported elsewhere including foreign exchange transactions;

- and any other element, namely costs impacting significantly their liquidity position.

Article 10: Banks and Financial Institutions shall identity additional one week financing resources and distinguish in this capacity:

- eligible assets not yet allocated as guarantee with the Bank of Algeria;

- other assets that might be provided as guarantee with other counterparts;

- other assignable assets;

- financing agreements received;

- any other financing source available which must be specified.

Article 11: The Executive body of the Bank of Algeria or the Financial Institution shall determine:

- the risk tolerance level of the institution, i.e. the level of risk taking that it accepts;

- the appropriate general policy of liquidity management adapted to its level of risk tolerance;

- and the procedures, limits, systems and tools of identification, measurement and management of liquidity risk.

Article 12: The executive body of the Bank or Financial Institution shall ensure adequacy and updating of procedures, systems and tools of identification, measurement and liquidity risk management. It shall transmit twice a year at least to the legislative body the results of such analysis.

Article 13: Services in charge of internal control shall ensure compliance with the requirements of this Regulation.

Article 14: The Legislative body shall decide at least once a year on the risk tolerance level, the general policy of liquidity risk management as well as methods used for the identification, measurement and limit of exposure to liquidity risk.

It shall be informed on findings of reviews and analyses of liquidity risk mentioned above and shall approve any substantial change of internal methodologies. It shall also be informed of results of crisis scenarios carried out pursuant to this Regulation and of actions taken, if any.

The audit committee, if any, shall conduct a regular review of internal methodologies and of underlying assumptions.

Article 15: Internal systems are used to identify, measure, manage and control, using indicators and limits and according to appropriately conservative assumptions inward and outward flows resulting from all assets, liabilities and off-balance sheet components.

Article 16: Banks and Financial Institutions shall set up methods and means to reduce the liquidity risk. For that purpose, they shall:

- have a stock of high quality assets free from any commitment and marketable at any time; - diversify appropriately their financing structures and access to financing resources;

- define terms of a prompt mobilization of additional financing resources.

They shall ensure the regular review of such methods and means.

Article 17: Banks and Financial Institutions shall set up indicators allowing to identify and measure assets of high quality free from any commitment and available at any time, namely in crisis situation.

They shall take into consideration their eligibility for refinancing with Bank of Algeria, the legal entity that has custody of their assets and the ability to market them rapidly. They value potential risks of concentration of their liquid assets.

Article 18: Banks and Financial Institutions shall define a set of limits relating to the indicators referred to in Articles 15 and 17 above consistent with the quality of their signatures and with the general conditions of the Market.

Article 19: According to the provisions of Article 2 of this Regulation, Banks and Financial Institutions shall assess their abilities to raise fund with each of their financing resources in both normal and crisis situations. For this purpose, they shall test periodically, directly or through their refinancing entities:

- borrowing opportunities, confirmed or unconfirmed, at their disposal with their counterparties; - mechanisms of refinancing available with the Bank of Algeria.

Article 20: Banks and Financial Institutions shall set up warning procedures and actions plans when limits are exceeded.

Article 21: Banks and Financial Institutions shall periodically test their scenarios in order to ensure that their exposition to liquidity risk is still compatible with risk tolerance they have defined.

They shall examine periodically relevance and degree of severity of assumptions used to establish them.

Article 22: The scenarios allow Banks and Financial Institutions to test at least:

- a crisis relating to the Bank or Financial Institution themselves and causing a sharp deterioration in financing conditions;

- a liquidity crisis; - a combination of both.

Article 23: Banks and Financial Institutions shall analyze results of such tests and take them into account in the measurement and operational management of liquidity risk.

Article 24: Banks and Financial Institutions shall set up formalized emergency plans that allow them to prepare and cope with crisis situations. Such plans shall specify the strategy to follow and procedures to manage liquidity according to different scenarios. Such procedures shall define:

- the persons concerned; - their level of responsibility and their duties; - alternative solutions to implement for an access to liquidity.

Article 25: Banks and Financial Institutions shall periodically test and update their emergency plans particularly with regards to crisis scenarios results in order to ensure that such scenarios are actually operational and appropriate.

Article 26: In the report of internal control that they shall draft pursuant to Article 45 of Regulation 02-03 of November 14th, 2002, mentioned above, Banks and Financial Institutions shall describe methods they use to manage their liquidity risk, the updates and any significant change.

Article 27: The provisions of this Regulation shall be applicable as from the date of its publication in the “Journal Officiel”.

Article 27: This Regulation shall be published in the “Journal Officiel” of the People’s Democratic Republic of Algeria.

The Governor Mohammed LAKSACI

REGULATION 11-05 OF JUNE 28TH, 2011 RELATING TO ACCOUNTING OF UNCOLLECTED INTERESTS

The Governor of the Bank of Algeria,

Whereas Order 03-11 of Jumaada al-Thaany 27th, 1424 corresponding to August 26th, 2003, as amended and completed, relating to Money and Credit, namely its Articles 62 (paragraph j);

Whereas the Presidential Decree of Raby` al-awal 10th, 1422 corresponding to June 2nd, 2001 relating to appointment of the Governor and Vice-Governors of the Bank of Algeria;

Whereas the Presidential Decree of Raby` al-awal 10th, 1422 corresponding to June 2nd, 2001 relating to appointment of members of the Executive Board of the Bank of Algeria;

Whereas the Presidential Decree of Sha`baan 26th, 1423, corresponding to November 2nd, 2002 relating to appointment of a member of the Executive Board of the Bank of Algeria;

Whereas the Presidential Decree of Thw al-Qi`dah 24th, 1424 corresponding to January 14th, 2004 relating to appointment of members of the Council of Money and Credit of the Bank of Algeria;

Whereas the Presidential Decree of Jumaada al-awal 5th, 1427 corresponding to June 1st, 2006 relating to appointment of a vice-governor of the Bank of Algeria;

Whereas Regulation 91-09 of August 14th, 1991, as amended and completed fixing prudential rules of management of Banks and Financial Institutions;

Whereas Regulation 09-04 of Sha`baan 1st, 1430 corresponding to July 23rd, 2009 relating to bank accounts chart and accounting rules applicable to Banks and Financial Institutions;

Whereas Regulation 09-05 of Shawwal 29th, 1430 corresponding to October 18th, 2009 relating to establishment and publication of financial statements of Banks and Financial Institutions; Whereas Regulation 09-08 of Muharram 12th, 1431 corresponding to December 29th, 2009 relating to rules of assessment and accounting for financial instruments by Banks and Financial Institutions;

Further to the Resolution of the Council of Money and Credit of June 28th, 2011

promulgates the Regulation the content of which follows:

Article 1: The object of this Regulation is to specify to Banks and Financial Institutions terms of accounting treatment of uncollected debts.

Article 2: Uncollected interest on claims of any nature shall be recorded in the assets side of the balance sheet statement in the appropriate sub-accounts of doubtful debts and in the liability side in “booked interests” adjustment accounts. Such interests shall be allocated to a revenue account only after being effectively collected.

Loans, securities and other claims shall be presented in balance sheet and monthly accounting statements of Banks and Financial Institutions, net of uncollected interests.

Article 3: Uncollected interest shall be recorded as booked interests as of the observation of non recovery.

Article 4: Classified claims, subject of a rescheduling as part of the financial support granted by the State to small and medium enterprises facing difficulties in repaying their bank debts net of uncollected interests, shall be those recorded at the end of April 2011.

Article 5: Banks and Financial Institutions shall transmit monthly to the Bank of Algeria a rescheduled claims statements referred to in Article 4 above according to reporting canvas defined by an instruction of the Bank of Algeria.

Article 6: This Regulation shall be published in the “Journal Officiel” of the People’s Democratic Republic of Algeria.

The Governor Mohammed LAKSACI

REGULATION 11-06 OF OCTOBER 19TH, 2011 AMENDING AND COMPLETING REGULATION 07-01 OF MOUHARAM 15TH, 1428 CORRESPONDING TO FEBRUARY 3RD, 2007 RELATING TO THE RULES APPLICABLE TO CURRENT TRANSACTIONS WITH FOREIGN COUNTRIES AND FOREIGN CURRENCY ACCOUNTS

The Governor of the Bank of Algeria,

Whereas Order 03-11 of Joumada Ethania 27th, 1424 corresponding to August 26th, 2003 relating to Money and Credit, namely its article 62, item m;

Whereas Order 75-59 of September 26th, 1975 relating to the Commercial Code, as amended and complemented;

Whereas the Budget Law of 1985, amended in article 156;

Whereas Order 96-09 of Chaabane 19th, 1416 corresponding to January 10th, 1996 relating to leasing;

Whereas Order 96-22 of Safar 23rd, 1417 corresponding to July 9th, 1996 relating to repression for infringement of he law and regulations relating to foreign exchange and movements of capital from and towards abroad, as amended and complemented;

Whereas Order 98-10 of Rabie Ethani29th, 1419, corresponding to August 22nd, 1998 amending and completing Law 79-07 of July 21st, 1979, relating to the Customs Code, as amended and complemented;

Whereas Order 01-03 of Aouel Joumada Ethania, 1422, corresponding to August 20th, 2001 relating to the development of investments as amended and completed;

Whereas Order 03-04 of Joumada El Oula 19th, 1424, corresponding to July 19th, 2003 relating to the general rules applicable to operations of import and export of goods;

Whereas Law 05-01 of Dhou El Hidja 27th, 1425 corresponding to February 06th, 2005 relating to the prevention and fight against money laundering and financing of terrorism;

Whereas Order 05-05 of Joumada Ethania 18th, 1426 corresponding to July 25th, 2005 relating to the complementary budget law for 2005;

Whereas Law 05-07 of Rabie El Aouel 10th, 1426 corresponding to April 28th, 2005 relating to hydrocarbons as amended and complemented;

Whereas the Presidential Decree of Rabie El Aouel 10th, 1422 corresponding to June 2nd, 2001 relating to the appointment of the Governor and Vice-Governors of the Bank of Algeria;

Whereas the Presidential Decree of Rabie El Aouel10th, 1422 corresponding to June 2nd, 2001 relating to the appointment of the members of the Board of Directors of the Bank of Algeria,

Whereas the Presidential Decree of Chaâbane 26th, 1423 corresponding to November 2nd, 2002 relating to the appointment of one member of the Board of Directors of the Bank of Algeria;

Whereas the Presidential Decree of Dhu Al Quida 24th, 1424 corresponding to January 14th, 2004 relating to the appointment of the members of the Council of Money and Credit of the Bank of Algeria;

Whereas the Presidential Decree of Joumada El Oula 05th, 1427 corresponding to June 1st, 2006 relating to the appointment of Vice-Governor of the Bank of Algeria;

Whereas Regulation 07-01 of Mouharam 15th, 1428 corresponding to February 3rd, 2007 relating to the rules applicable to external current transactions and foreign currency accounts;

Whereas the resolutions of the Council of Money and Credit of October 19th, 2011;

promulgates the Regulation the content of which follows:

Article 1: The object of this Regulation is to amend and complete Regulation 07-01 of February 3rd, 2007 relating to the rules applicable to external current transactions and foreign currency accounts.

Article 2: Article 61 of Regulation 07-01 of February 3rd, 2007 mentioned above shall be amended to read as follows:

“Article 61:

The non hydrocarbon export contract may be established in cash or on credit.

The exporter shall repatriate the proceeds generated by the exportation within a deadline not exceeding one hundred and eighty (180) days as from the shipment date of goods or from the completion date of services.

If the payment of exportation is required within a deadline exceeding one hundred and eighty (180) days, such exportation shall take place only after an authorization from the relevant services of the Bank of Algeria.

Article3: This Regulation shall be published in the Journal Officiel of the People’s Democratic Republic of Algeria

The Governor Mohammed Laksaci

REGULATION 2011-07 OF OCTOBER 19TH, 2011 AMENDING AND COMPLETING REGULATION 08-01 OF JANUARY 20TH, 2008 RELATING TO THE SYSTEM OF PREVENTION AND FIGHT AGAINST THE ISSUE OF DUD CHEQUES

The Governor of the Bank of Algeria,

Whereas Order 75-59 of September 26th, 1975 as amended and completed relating to the Commercial Code, namely its articles 526 bis through 526 bis 16;

Whereas Order 03-11 of Joumada 27th Ethania, 1424 corresponding to August 26th, 2003 relating to Money and Credit as amended and completed, namely its article 98;

Whereas the Presidential Decree of Rabie El Aouel 10th, 1422 corresponding to June 2nd, 2001 relating to the appointment of the Governor and Vice-Governors of the Bank of Algeria;

Whereas the Presidential Decree of Rabie El Aouel 10th, 1422 corresponding to June 2nd, 2001, relating to the appointment of the members of the Board of Directors of the Bank of Algeria;

Whereas the Presidential Decree of Rabie El Aouel 10th, 1422 corresponding to June 2nd, 2001 relating to the appointment of the members of the Council of Money and Credit of the Bank of Algeria;

Whereas the Presidential Decree of Chaâbane 26th, 1423, corresponding to November 2nd, 2002 relating to the appointment of a member of the Board of Directors of the Bank of Algeria;

Whereas the Presidential Decree of Joumada El Aouel 5th, 1427 corresponding to June 1st, 2006 relating to the appointment of Vice-Governor of the Bank of Algeria,

Whereas Regulation 92-02 of March 22nd, 1992 relating to the organization and operation of the Overdue Payments Registry;

Whereas Regulation 94-12 of June 2nd, 1994 relating to principles of management and establishment of standards in the financial sector; Whereas Regulation 08-01 of January 20th, 2008 relating to the system of prevention and fight against the issuing of dud cheques;

Further to the deliberations of the Council of Money and Credit of October 19th, 2011,

Promulgates the Regulation the content of which follows:

Article 1: The object of this Regulation is to amend and complete Regulation 08-01 of January 20th, 2008 mentioned above.

Article 2: Article 4 of Regulation 08-01 of January 20th, 2008 relating to the system of prevention and fight against the issuing of dud cheques shall be amended and completed as follows:

“Article 4: As soon as a delinquency due to a lack of or to insufficient provision is recorded, the drawee shall be compelled to notify such in accordance with the provisions of the Commercial Code, to the Overdue Payments Registry of the Bank of Algeria, within four (04) working days following the date of submission of the cheque. In this context, a certificate of non-payment, the standardized model of which is attached to this Regulation (schedule 1) shall be established and submitted to the beneficiary of the unpaid cheque:

- by the drawee bank, during the submission of cheque to payment at the counter of the account domiciliation or where appropriate in manual compensation; - by the bank representing the cheque when cheque is rejected at the clearing cession according to the procedure of electronic compensation system known as “Algérie Télé-compensation Inter-bancaire (ATCI)” and to standards of inter-bank exchange of payment instruments.

Without prejudice to provisions relating to the deadline of four (4) days provided for in the first paragraph, a copy of the certificate of non payment should be submitted promptly by the institution presenting the cheque to the drawee institution”

Article 3: Article 5 of Regulation 08-01 of January 20th, 2001 is amended and completed as follows:

“Article 5: As soon as the first delinquency is recorded for lack of or for insufficient provision duly established, the drawee shall send to the cheque issuer within the deadline provided for by the law in force an injunction letter according to the model given in the schedule attached to this regulation (schedule 2)”.

Article 4: Article 9 of Regulation 08-01 of January 20th, 2001 is amended and completed as follows:

“Article 9: The injunction letter provided for in article 8 above shall state precisely the amount and payment deadline of the discharging penalty. The model of the injunction letter shall be attached to this regulation (schedule 3). Failing to regularize the delinquency within the cumulative periods provided for by the Commercial Code, criminal prosecution will be taken according to the provistions of the Criminal Code.”

Article 5: Regulation 08-01 of January 20th, 2001 shall be completed by Article 9bis to read as follows:

“Article 9 Bis: There is recurrence according to Articles 526 bis 3 and 526 bis 5 of the Commercial Code in case a delinquency is recorded subsequent to the issuance of a dud cheque within twelve months (12) following the first delinquency even if the latter has been subject to regularization”.

Article 6: Article 10 of Regulation 08-01 of January 20th, 2008 is amended as follows:

“Article 10: in case of recurrence within twelve (12) months following the first delinquency, the drawee shall pronounce systematically against the drawer a ban on issuing cheques for a period of five (5) years. Such prohibition takes effect as from the date of sending the notification to regularize the overdue cheque.

Such notice, the model of which is attached to this Regulation (schedule 4), shall state that it is charged to the issuer of the unpaid cheque a penalty equal to twice the discharging penalty provided for in Artticle 526 bis of the Commercial Code”

Article 7: This Regulation shall be published in the Journal Officiel of the People’s Democratic Republic of Algeria.

The Governor Mohammed LAKSACI

SCHEDULE 1 OF REGULATION 11-07 OF OCTOBER 17TH, 2011

CERTIFICATE OF NON PAYMENT

We the undersigned, ………………….. agency code ………………(1) Hereby certify that the cheque, of which all the identification elements are mentioned below, has been rejected by………. agency code …………(2) For the reason: insufficient provision, rejection code : 007

Full name or company name of the drawer…………………………

Bank account number of the drawer…………………..

Full name or company name of the beneficiary…………………………

Bank account number of the beneficiary…………………….. Cheque number ………………….. Amount of the cheque…………………… Date of cheque issuance ………………………….. Date of the cheque presented for payment……………………. Date of rejection by the drawee bank………………. Number of the RIO (interbank reference of the original transaction to which the rejection relates)……………………

This certificate is issued for claims of protest under regulations and law in force.

Done in ………on ……

Stamp and certified signature

(1) name and agency of the remitting bank (2) name and agency of the drawee bank

SCHEDULE 2 OF REGULATION 11-07 OF OCTOBER 19TH, 2011

Institution:……………………… Bank branch :…………………….. Full name or company name or trade name:……………………. Address:…………………..

Subject: injunction of regularization after the first delinquency

Mrs, Mis, Mr,

This is to inform you that cheque No…….., of the amount of ………..issued on ……………; drawn on your account No …………………… payable to ………………… and presented for payment on……..has been rejected by ourselves for lack of (or insufficient) provision.

According to law in force, a certificate of non payment has been delivered to the beneficiary which is equivalent to document of protest. Pursuant to the provisions of Article 531 of Commercial Code, the declaration of delinquency has been notified to the Overdue Payments Registry of the Bank of Algeria.

To avoid bank banning which you are liable to, we invite you to regularize the delinquency mentioned above within ten (10) days as from the mailing date of this letter by constituting a sufficient and available provision for the payment of the cheque by ourselves and that during the period mentioned above.

Failing to regularize within the prescribed period in accordance with the legal provisions, you will be declared prohibited from issuing cheques for a period of five (5) years as from the mailing date of the injunction letter, and in this regard:

- you will be prohibited from issuing cheques on all your accounts other than the cheques issued by your bank and payable with the drawee at its counter; - you will be compelled to give back cheque forms in your possession and that of your representatives; - to recover the possibility of issuing cheques, you will be subject to payment of the discharge penalty in favour of Treasury including the amount of the unpaid cheque.

Henceforth, we invite you to insure the availability of a sufficient provision before any issuance of cheque. In case of recurrence during twelve (12) months as from the injunction deadline, you will be prohibited from issuing cheques for a period of five (5) years, without the possibility of regularization.

Done in ……, on……………….

SCHEDULE 3 TO REGULATION 11-07 OF OCTOBER 2011

Institution:……………………… Bank branch :…………………….. Full name or company name or trade name:……………………. Address:…………………..

Subject: injunction of regularization within the second time limit

Mrs, Mis, Mr,

This is to inform you that cheque No…….., of the amount of ………..issued on ……………; drawn on your account No …………………… payable to ………………… and presented for payment on………..has been rejected by ourselves for lack of (or insufficient) provision.

According to law in force, a certificate of non payment has been delivered to the beneficiary which is equivalent to document of protest. Pursuant to the provisions of Article 531 of Commercial Code the declaration of delinquency has been notified to the Overdue Payments Registry of the Bank of Algeria.

We remind you that this delinquency subject of our registered injunction letter with acknowledged receipt dated………….. has not been regularized within the first dealine of ten (10) days.

Therefore, we inform you that you are prohibited from issuing cheques for a period of five (5) years as from ……………….pursuant to the legal provisions and law in force. In this regard:

- you will be prohibited from issuing cheques on all your accounts other than the cheques issued by your bank and payable with the drawee; - you will be compelled to give back cheque forms in your possession and that of your representatives;

However, to recover the possibility of issuing cheques, you will be subject to payment of the discharging penalty in favour of Treasury, the amount of which is ……………dinars including the amount of the cheque, through a sufficient and available provision in our bank, within twenty (20) days as from the expiry of the first injunction deadline.

Henceforth, we invite you to insure the availability of sufficient provision before any issuance of cheque. In case of recurrence during the twelve (12) months as from the injunction deadline, you will be prohibited from issuing cheques for a period of five (5) years, without the possibility of regularization.

Done in ……………, on………….

SCHEDULE 4 TO REGULATION 11-07 OF OCTOBER 19TH, 2011

Institution:……………………… Bank branch :…………………….. Full name or company name or trade name:……………………. Address:…………………..

Subject: notice of prohibition in case of recurrence

Mrs, Mis, Mr,

This is to inform you that cheque No…….., of the amount of ………..issued on ……………; drawn on your account No …………………… payable to ………………… and presented for payment has been rejected by ourselves for lack of (or insufficient) of provision.

According to law in force, a certificate of non payment has been delivered to the beneficiary which is equivalent to document of protest. Pursuant to the provisions of Article 531 of Commercial Code the declaration of delinquency has been notified to the Overdue Payments Registry of the Bank of Algeria.

We remind you that this delinquency occurs within the twelve (12) months following the first delinquency.

Therefore, we inform you that you are prohibited from issuing cheques for a period of five (5) years as from…………………and thus pursuant to the legal provisions and regulations in force. In this regard:

- you will be prohibited from issuing cheques on all your accounts other than the checks issued by your bank and payable with the drawee; - you will be compelled to give back cheque forms in your possession and that of your representatives; - you are compelled to pay a penalty equal to twice of the discharging penalty in favour of the treasury, the amount of which is……………..dinars including the amount of the cheque through a sufficient and available provision in our bank. We remind you that in case of non regularization of this situation, criminal prosecutions might be undertaken against you by the beneficiary.

According to the legal provisions and regulations in force, any challenge to this ban and the penalty fee is referred to the competent Court. Done in ………, on………………

REGULATION 11-08 OF NOVEMBER 28TH, 2011 RELATING TO INTERNAL AUDIT OF BANKS AND FINANCIAL INSTITUTIONS

The Governor of the Bank of Algeria,

Whereas Order 75-59 of September 26th, 1975 , as amended and completed, relating to Commercial Code;

Whereas Order 03-11 of Joumada Ethania 27th, 1424 corresponding to August 11th, 2003, as amended and completed, relating to Money and Credit, namely its articles 97 bis and 97 ter;

Whereas law 05-01 of Dhou El Hidja 27th, 1425 corresponding to February 6th, 2005 relating to the prevention and fight against money laundering and financing of terrorism;

Whereas law 07-11 of Dhou El Kaada 15th, 1428 corresponding to November 25th, 2007, as amended, on the financial accounting system;

Whereas the Executive Decree 08-156 of Joumada El Oula 20th, 1429 corresponding to May 26th, 2008 relating to application of the provisions of law 07-11 of Dhou El Kaada 15th, 1428 corresponding to November 25th, 2007 relating to financial accounting system;

Whereas the Executive Decree 09-110 of Rabie Etani 11th, 1430 corresponding to April 7th, 2009 setting the terms and conditions of bookkeeping by means of computer systems;

Whereas the Presidential Decree of Rabie El Aouel 10th, 1422 corresponding to June 2nd, 2001 relating to appointment of the Governor and vice-Governors of the Bank of Algeria;

Whereas the Presidential Decree of Rabie El Aouel 10th, 1422 corresponding to June 2nd, 2001 relating to the appointment of members of the Board of Directors of the Bank of Algeria;

Whereas the Presidential Decree of Chaabane 26th, 1423 corresponding to November 2nd, 2002 relating to the appointment of a member of the Board of Directors of the Bank of Algeria; Whereas the Presidential Decree of Dhou El Kaada 24th, 1424 corresponding to January 14th, 2004 relating to the appointment of members of the Council of Money and Credit of the Bank of Algeria;

Whereas the Presidential Decree of Joumada El Oula 5th, 1427 corresponding to June 1st, 2006 relating to appointment of a Vice-Governor of the Bank of Algeria;

Whereas the Order of Rajab 23rd, 1429 corresponding to July 26th, 2008 setting rules of assessment and accounting, content and the presentation of financial statements as well as nomenclature and rules of accounts functioning;

Whereas Regulation 91-09 of August 14th, 1991, as amended and completed, fixing the management prudential rules of Banks and Financial Institutions;

Whereas Regulation 02-03 of Ramadan 9th, 1423 corresponding to November 14th, 2002 relating to internal audit of Banks and Financial Institutions;

Whereas Regulation 05-05 of Dhou El Kaada 13th, 1426 corresponding to December 15th, 2005 relating to the prevention and fight against money laundering and financing of terrorism;

Whereas Regulation 09-04 of Aouel Chaabane 1430 corresponding to July 23rd, 2009 relating to banking accounting chart and accounting rules applicable to banks and Financial Institutions;

Whereas Regulation 09-05 of Chaoual 29th, 1430 corresponding to October 18th, 2009 relating to the establishment and publication of financial statements of Banks and Financial Institutions;

Whereas Regulation 09-08 of Moharram 12th, 1431 corresponding to December 29th, 2009 relating to assessment rules and financial instruments accounting by Banks and Financial Institutions;

Whereas Regulation 11-03 of Joumada Ethania 21st, 1432 corresponding to May 24th, 2011 relating to supervision of interbank risks;

Whereas Regulation 11-04 of Joumada Ethania 21st, 1432 corresponding to May 24th, 2011 relating to identification, measure , management and control of liquidity risk.

Whereas Resolution of the Council of Money and Credit of November 28th, 2011; promulgates the Regulation the content of which follows:

Article 1: The object of this Regulation is to define the content of the internal audit that banks and financial institutions shall implement pursuant to articles 97 bis and 97 ter of Order 03-11 of Joumada Ethania 27th, 1424 corresponding to August 26th, 2003 as amended and completed, mentioned above.

Article 2: As defined in this Regulation, it is understood that: a) Risk of credit: risk incurred in the event of default of counterparty or counterparties considered as the same beneficiary as defined in article 2 of Regulation 91-09 of August 14th, 1991 as amended and completed setting the prudential management rules of Banks and Financial Institutions. b) Risk of concentration: risk resulting from credits or commitments granted to a same counterparty, to counterparties considered as the same beneficiary as defined in Article 2 of Regulation 91-09 as amended and completed mentioned above, to counterparties operating in the same economic sector or the same geographic zone or the risk resulting from granting credits on the same activity or the application of technics of reduction of credit risk, namely sureties issued by the same issuer. c) Risk of overall interest rate: risk incurred in case of variation of interest rates due to all balance sheet and off balance sheet transactions, except where appropriate, transactions subject to market risks mentioned in e) hereinafter. d) Risk of settlement: risk incurred namely in foreign exchange transactions within the period where the instruction of payment of a transaction or financial instrument sold shall not be canceled unilaterally and the final reception of foreign currencies, the instrument bought or the corresponding funds. Such risk includes namely the risk of counterparty settlement (risk of counterparty default) and risk of settlement (risk of non delivery of the instrument). e) Risk of market: risk of losses on balance sheet and off balance sheet exposures following variation of market prices. They include namely;

- risks relating to instruments related to interest rates and portfolio securities; - foreign exchange risk. f) Risk of liquidity: the risk of not being able within a specified period and at a reasonable cost to meet commitments or of not being able to unwind or offset a position owing to the market situation. g) Legal risk: risk of litigation with a counterparty resulting from any inaccuracy, omission or failure of any kind likely to be attributable to the bank or financial institution in respect to its operations. h) Risk of non-compliance: risk of legal, administrative or disciplinary sanction and the risk of significant financial loss or damage to reputation which arises from non-compliance with the provisions specific to the activities of banks and financial institutions whether legislative, regulatory, or relating to professional and ethical standards or to instruction of the executive body taken pursuant to the guidance of the legislative body. i) Operational risk: risk resulting from inadequacy or failure due to proceedings, staff, internal systems or external events. It includes internal and external fraud risks. j) Plan for business continuity: all measures aiming at maintaining according to different crisis scenarios essential or important tasks of the bank or financial institution at a degraded mode, if any, the planned resumption of business activities. k) Executive body: persons who, according to article 90 of Order 03-11 of August 26th, 2003, as amended and completed, relating to money and credit, shall ensure the effective determination of guidance of the activity of the bank or financial institution and the responsibility of its management. l) Legislative body: the Board of Directors or Supervisory Board. m) Audit committee: the committee that could be created by the legislative body to assist in carrying out its duties. The legislative body shall define the composition, missions and operational pocedures of the audit committee and conditions in which auditors and persons belonging to the bank or financial institution concerned are associated with its work.

However, members of the executive body may not be members of the audit committee.

Article 3: The internal audit of banks and financial institutions includes all the proceedings, methods and measures aiming at ensuring permanently, namely :

- control of activities; - proper functioning of internal procedures; - taking properly into account all risks including operational risks; - compliance with internal procedures; - compliance with laws and regulations; - transparency and traceability of banking transactions; - reliability of financial information; - safeguarding of assets - efficient use of resources.

Article 4: The internal audit system that banks and financial institutions shall implement include namely:

- a control system of transactions and internal proceeding; - an accounting organization and information processing; - systems for measuring risks and results; - systems to monitor and control risks; - system of documentation and archiving;

Article 5: Banks and financial institutions shall implement an internal control by adapting all systems provided for by this Regulation according to the nature and volum of their activities, size, implantations and risks of different natures to which they are exposed. The internal control shall apply to all structures and activities and also to all companies controlled exclusively or jointly.

TITLE I

SYSTEM FOR CONTROLLING OPERATIONS AND INTERNAL PROCEDURES

A- General Provisions

Article 6: The system for controlling operations and internal procedures aims in optimal conditions of safety, reliability and completeness to:

- check the compliance of operations carried out and internal procedures in use with legislative and regulatory provisions, professional and ethical standards and practices, guidance of the legislative body and instructions of the executive body as well; - check the strict compliance with internal procedures of risk-taking decision of any kind as well as the implementation of management standards set by the executive body; - check the quality of financial and accounting information whether intended to the executive or legislative body, transmitted to the Bank of Algeria or to the Banking Commission or intended to be published; - control the conditions under which accounting and financial information are assessed, recorded, conserved and available, ensuring in particular the audit trail referred to in this Regulation; - check the quality of information and communication system ; - ensure the execution within reasonable deadlines of corrective measures decided upon;

Article 7: The system for controlling operations and internal procedures includes:

a) a permanent control of the compliance, safety and validation of transactions carried out, and the respect of all guidance, instructions, internal procedures and diligences adopted by the bank or the financial institution, namely those relating to the monitoring of risks associated with transactions; b) a periodic control of the regularity and the safety of transactions, compliance with internal procedures, effectiveness of permanent control, level of risk actually incurred; finally the effectiveness and appropriateness of devices for the control of risks of any kind.

Article 8: Pursuant to the provisions of article 7 above, banks and financial institutions shall:

a) ensure a permanent control of transactions with a variety of means including: - agents in central and local services exclusively dedicated to this function; - other agents exercising operational activities as well.

b) exercise a periodic control through dedicated agents, other than those responsible for the permanent control mentioned above.

Article 9: Banks and financial institutions shall appoint:

a) a person in charge of coordination and effectiveness of the permanent control systems; b) a person responsible for ensuring the consistency and efficiency of the periodic control system. Their identity shall be communicated to the Banking Commission.

The legislative body shall be informed by the executive body of the appointment of these persons and of reports relating to their work.

Unless they are members of the executive body, these persons shall not carry out any commercial, financial or accounting transaction.

Article 10: When the size of the bank or financial institution does not justify entrusting responsibilities of permanent control and periodic control to different persons, these responsibilities may be assigned either to one person or to a member of the executive body that shall under the control of the legislative body ensure the coordination of all the systems that are bound to the performance of their duties.

Article 11: Persons in charge of permanent control and periodic control shall report the performance of their duties to the executive body. They shall report as well to the governing body and to the executive body upon their request and to the audit committee, if such exists

The person in charge of periodic control shall directly report once a year the performance of his duties to the legislative body and to the audit committee if such exists.

Article 12: Banks and financial institutions shall ensure that permanent control systems are integrated in the organization, methods and procedures of each of their activities and implantations and that the periodic control apparatus applies to the entire bank or financial institution and to companies controlled according to the provisions of article 5 of this Regulation.

Article 13: The number, qualifications and means, in particular the monitoring tools and methods of risk analysis of persons and devices referred to in articles 7, 8 and 9 must be adapted to the activities, size and site locations of the bank or financial institution concerned.

Article 14: Permanent control and periodic control systems as well as systems of risk measurement and determination of limits must be re-examined regularly in order to ensure their effectiveness as regards the evolution of activity, environment, markets or techniques of analysis.

Article 15: The organization of banks and financial institutions adopted under permanent control must ensure the strict independence between units in charge of initiating transactions and units in charge of their validation as regards accounting validation of operations and their settlement as well as the monitoring of instructions or guidance bound to the supervision of risks.

Article 16: Systems responsible for permanent control shall run independently relative to operating units for which they perform their duties. This independence between units responsible for initiating transactions and units responsible for their validation may be ensured by a hierarchical reporting of sufficiently high level, different from these units or by an organization that ensures clear separation of functions or even by computer procedures designed for this purpose. Banks and financial institutions should justify the adequacy of such systems.

Article 17: Periodic control should be exercised by agents having in particular through a reporting line to the highest level, the ability to perform their duties independently with regards to the entities they control.

Article 18: Ressources allocated to periodic control must be adequate to carry out investigations of all activities and all site locations on a number of fiscal years as limited as possible. A program of periodic control should be established at least once a year by integrating annual objectives in terms of internal control set by the executive body and legislative body.

Such program must be sent to the legislative body.

B- special provisions relating to control compliance

Article 19: Banks and financial institutions shall under conditions defined hereinafter implement a system for monitoring the risk of non compliance mentioned in article 2h) of this Regulation.

Article 20: Banks and financial institutions shall appoint a person in charge of ensuring the consistency and effectiveness of the monitoring of the risk of non compliance. They shall provide the name to the Banking Commission. This person in charge of monitoring the compliance -unless it is a member of the executive body-shall not carry out any commercial, financial or accounting transaction.

Banks and financial institutions shall determine if the person in charge of the monitoring of compliance should report the performance of his duties to the person in charge of the permanent control as provided for in Article 9 a) or directly to the executive body .

Article 21: If the size of the bank or financial institution does not justify entrusting the responsibility of the control of compliance to a specific person, such responsibility may be performed, either by the person in charge of permanent control or a member of the executive body.

Article 22: Banks and financial institutions should ensure that the resources put at the disposal of agents in charge of control of compliance are sufficient and appropriate to their activities.

Article 23: Banks and financial institutions shall implement a permanent mechanism to ensure regular and more frequent monitoring of changes that may occur in regulations relevant to their operations. The personnel concerned shall be informed immediately.

Article 24: Banks and financial institutions shall provide specific procedures relating to the review of compliance of their transactions.

Article 25: The bank or the financial institution that decides to perform transactions on new products for itself or for the market or operates significant transformations of existing financial products should proceed to a specific analysis of risks generated by this product, namely the risk of non compliance.

The person in charge of compliance control should ensure that this analysis has been previously carried out and performed in rigorous manner. He should also ensure that the procedures relating to the measure, limit and control of risks incurred by these new financial products are in place and that, were appropriate, necessary adaptations to existing procedures were undertaken and validated, namely with regard to accounting procedures, data processing and permanent control. The person must formulate a written notice.

Article 26: Banks and financial institutions shall define procedure allowing for the prevention of conflicts of interest and ensure the professional ethics of the personnel and members of the executive body and the legislative body.

Article 27: Banks and financial institutions shall implement procedures of centralization and assessment of information relating to possible malfunction in the effective implementation of compliance requirements. They shall regularly ensure the monitoring of corrective actions undertaken.

Procedures mentioned above provide in particular the ability for any officer or appointee to inform the person in charge of compliance control or to one of his substitute to query on possible malfunctions relating to compliance, namely on the regularity of transactions, compliance, or actions with regard to provisions relating to conflicts of interests or professional ethics. This ability and its modalities of implementation shall be brought to the attention of all agents.

Article 28: Banks and financial institutions shall provide members of their personnel information on their obligations of compliance imposed on them, namely under the provisions of article 26 above and for the relevant staff a training for compliance control procedures tailored to the transactions they carry out.

c- Particular provisions to the system of prevention and fight against money laundering and financing of terrorism

Article 29: Banks and financial institutions build an organization, procedures and resources capable of allowing them to comply with the legal and statutory provisions applicable to the prevention and fight against money laundering and the financing of terrorism.

Thereto, banks and financial institutions should in particular: a) ensure a rigorous knowledge of their clients and transactions they carry out. For this purpose, banks and financial institutions shall develop internal standards specifying in particular:

- policy for accepting new clients; - procedures for client identification and verification of documents submitted; - classification of their clients regarding risks of money laundering and financing of terrorism ; - nature of diligence to be taken in terms of risks associated with different types of clients, accounts movements and transactions;

These internal standards should be in permanent adequacy with activities carried out and specific risks that they pose in terms of money laundering and financing of terrorism. b) collect information on their banking correspondents and ensure namely that correspondents are subject to a control by the relevant authorities and that they collaborate as part of national system to the fight against money laundering and financing of terrorism. c) ensure accurate identification of the ordering party and the beneficiary of electronic transfers as well as their respective addresses, whatever the medium used. d)) monitor through appropriate systems the movement of funds in order to identify the types of transactions, atypical and unusual transactions or transactions without economic justification. This monitoring must be adapted to the risks incurred due particularly to customer profiles or transactions carried out. e) have early warning systems allowing for all accounts to identify operations and activities that arouse suspicions of money laundering or financing of terrorism. For these transactions, banks and financial institutions are required to inquire about the origin and destination of funds, on the purpose of the transaction and the identity of the stakeholders. Banks and financial institutions keep record of the verification procedures performed. f) comply with the legal obligation to report suspicious transactions under the legal and regulatory regulations in force. g) maintain in accordance with rules and time limits in force documents relating to the identification and knowledge of customers, diligences conducted regarding transactions or operations identified by early warning systems, the elaboration of statements of suspicion and finally documents relating to the transactions recorded on the accounts. h) establish an ongoing program of training to prepare staff to the knowledge of control devices against money laundering and financing of terrorism. i) inform all staff about procedures established to allow any agent to report suspicious transactions to the compliance officer in the fight against money laundering and financing of terrorism. j) define in a document the criteria of ethics and professionalism for reporting suspicious transactions and bring this document to the attention of all staff.

Article 30: The permanent control of the apparatus for the prevention and fight against money laundering and financing of terrorism is part of the monitoring of conformity referred to above. The supervisor of compliance control referred to in article 20 of this Regulation shall ensure suitability of the systems and procedures in place with regard to legal and regulatory requirements, as well as risks incurred by the bank or financial institution.

For this purpose, the officer in charge of the unit processing financial information shall be responsible as well for compliance with regards to the fight against money laundering, under article 18 of Regulation 05-05 of 15 December 2005, aforesaid mentioned above in this Regulation TITLE II

ACCOUNTING ORGANIZATION AND INFORMATION PROCESSING

Article 31: Banks and financial institutions must comply with legislative and regulatory provisions relating to financial accounting system, namely regulations of the Council of Money and Credit and instructions of the Bank of Algeria: a) regarding information included in the accounts and financial statements, the organization implemented should ensure the existence of a set of procedures, called "audit trail" which allows to:

- restore transactions in chronological order; - justify any information by an original document from which it should be possible to trace a continuous path to the summary document and vice versa; - justify account balances on specified dates through appropriate statements (physical inventory, breakdown of balances, reconciliation statements, confirmation from third parties); - explain the evolution of balances from one bank statement to another, through the conservation of movements affecting accounting items.

In particular, balances in financial statements should be connected either directly or by combinations to items and sub-items in the balance sheet, off-balance sheet and profit and loss statements and to information from the accounts contained in the appendix. The balance may be checked by breaking down other accounts, provided that compliance with appropriate rules of safety and control can be demonstrated and subject that the bank or financial institution is able to describe the method used. b) Accounting information contained in the documents and the periodic reporting intended to the Bank of Algeria or the Banking Commission as well as the information necessary to calculate management standards should be drawn from the accounting statements and justified by original documents.

Each amount stated in the financial statements and periodic reporting provided to the Bank of Algeria or the Banking Commission should be controllable especially from the detailed elements that compose it.

When the Bank of Algeria or the Banking Commission authorizes that information should be provided in statistical form, such should be verifiable.

Article 32: Banks and financial institutions shall be compelled to maintain all files necessary to justify the financial statements and periodic reporting of the last report submitted to the Bank of Algeria and the Banking Commission, at least until the date of the next following report.

Article 33: Banks and financial institutions shall ensure the completeness, quality and reliability of information and methods of assessment and accounting, namely:

- through a periodic control of the appropriateness of accounting schemes under the general objectives of safety and prudence as well as their compliance with accounting rules in force;

- through a periodic control of the adequacy of methods and parameters used for the assessment of transactions and management of systems;

- for transactions that incur market risk by at least monthly reconciliation between the calculated results for the operational management and results accounted for in accordance with the rules of assessment in force. Discrepancies must be identified and analyzed.

Article 34: Assets held by banks and financial institutions on behalf of third parties not included in financial statements should be subject to bookkeeping or to a monitoring retracing actual stocks, inputs and outputs. An allocation is made, if it is significant, between components of stock held as mere custodian and components of stock that guarantee either a credit granted or a commitment undertaken to specific purposes or under a general and permanent agreement in favor of the applicant.

Article 35: Banks and financial institutions shall determine the level of Information Technology security deemed necessary with regard to the requirements of the profession. They ensure that their information systems constantly integrate this minimum security retained.

Article 36: The control of information systems should, in particular help ensure that:

. the level of security of information systems is periodically evaluated and where appropriate the related corrections made; . computer back-up procedures are available as part of a plan for business continuity, to ensure the ongoing operation; . integrity and confidentiality of information are preserved.

The control of information systems extends to the conservation of information and documentation relating to the analysis, programming and implementation of operations.

TITLE III

SYSTEMS FOR MEASURING RISK AND RESULTS

Article 37: Banks and financial institutions shall implement systems of measurement and risk analysis, by adapting them to the nature and volume of their transactions, in order to apprehend the risks of different natures to which these transactions expose: credit, concentration, market, global interest rates, liquidity, settlement, non-compliance, and operational risks. Banks and financial institutions must regulary evaluate the results of their transactions.

These systems also allow to apprehend cross way and in a prospective manner the analysis and risk assessment.

Article 38: Banks and financial institutions shall implement systems and procedures to apprehend the overall risks to which they are exposed. These systems and procedures should allow mapping of risks which identifies and assesses all risks incurred, due to both internal factors (such as the nature of the activities or quality of existing systems) and external factors (such as economic conditions or natural events).

This mapping should:

. be established by type of activity or business line; . allow to assess risks incurred in an activity under the guidelines adopted by the executive and legislative bodies; . identify actions to be taken to reduce risks incurred through actions aimed at strengthening internal control devices and measurement and risk monitoring systems; . define and refine plans for business continuity.

A - The selection and measurement of credit risks

Article 39: Banks and financial institutions should have procedures for selecting credit risks and systems for measuring these risks. These systems must enable them: - to identify on a centralized basis their balance sheet and off-balance sheet risks in respect of a counterparty or counterparties considered as a same beneficiary as defined in article 2 of Regulation 91-09 of 14 August 1991, aforesaid; -to apprehend different categories of risk levels based on qualitative and quantitative information in accordance with article 7 of Regulation 91-09 of 14 August 1991, referred to above; - to carry out the distribution of their commitments on behalf of all counterparties by level of risk incurred by business line, region and interrelated debtors, in order to apprehend the potential risks of concentration; - to ensure the adequacy of risk incurred with the credit policy adopted by the legislative and executive bodies. a) System for selecting credit risks

Article 40: The assessment of credit risk must take into account elements relating to the financial position of the beneficiary on his repayment capacity and where appropriate the collateral received. For companies, the assessment must include the analysis of their business environment, the characteristics of partners or shareholders and managers. The assessment must also take into account the most recent accounting and financial documents.

Banks and financial institutions must establish credit files of credit intended to receive all qualitative and quantitative information on counterparties and information on counterparties considered as a same beneficiary as defined above. These files shall be completed at least quarterly for counterparties whose claims are unpaid or doubt full and whose amounts are significant.

Article 41: The selection of credit operations must also take into account their profitability. To this end, the forecast analysis of direct and indirect expenses and income must for each credit be as complete as possible. The analysis must focus primarily on operational and financing costs, costs corresponding to the estimated risk of non-payment by the beneficiary of a credit and the cost of remuneration of equity.

Article 42: The assessment and selection of credit risk shall also take into account the future income generated by the investment project and, where appropriate, the safeguards, including legal mortgage on the real estate of the debtor, the pledge of materials and equipment.

Article 43: The assessment of credit risk must also take into account the possibility of a mortgage affecting the real estate resulting from a deed of concession of land in the private domain of the State as well as taking as collateral constructions to be built on such land as a security for the recovery of loans granted exclusively to finance an investment project.

Article 44: The executive body performs at least semi annually a posteriori analysis of the profitability of credit operations.

Article 45: Decision-making procedures for granting loans or commitments by signature, especially when they are organized through the setting of delegation of signature shall be clearly formalized and adapted to the characteristics of the bank or financial institution regarding in particular its size, organization and the nature of its activities.

Article 46: When the nature, number or importance of credit transactions require, credit files shall be subject to analysis by a specialized unit, independent from operational units. Loan decisions or commitments by signature shall be made by two people at least. b) System for measuring credit risk

Article 47: Banks and financial institutions must implement a system for measuring credit risk in order to identify, measure and aggregate risks that emerge from all balance sheet and off-balance sheet transactions for which the bank or financial institution incurs the risk of default of a counterparty or counterparty considered as same beneficiary or more generally of concentration risk.

Article 48: Banks and financial institutions must carry out at least quarterly, an analysis of the evolution of the quality of their commitments on the basis of the balance sheet and the off balance sheet statements. This analysis should allow the reclassification of credit transactions, the account for the non performing loans and to predict provisioning thereon, taking into account the collateral taken and ensuring that its assessment is recent, independent and prudent.

B – System for measuring interbank risk

Article 49: Banks and financial institutions must set up a system for fixing and measuring the allocation of their outstanding loans and interbank borrowings.

This system comprises namely a set of limits, a system for recording and processing information enabling for all counterparty to obtain centralization of loans made and borrowings contracted and finally procedures for the monitoring and controlling of the limits set.

C – System for measuring liquidity

Article 50: Banks and financial institutions must establish a system of identification, measurement and management of their liquidity risk. This system is based namely on determining general policy of liquidity management and tolerance to liquidity risk, on making forecasts, on the identification of funding sources, on a set of limits assorted for measuring systems, monitoring and early warnings and finally the development of regularly updated crisis scenarios.

D - System for measuring risk of overall interest rate

Article 51: Banks and financial institutions must, when the exposure is significant, implement an internal information system to apprehend their exposure to the risk of overall interest rate, to ensure its monitoring and to predict the necessary corrections.

E. - System for measuring settlement risk

Article 52: Banks and financial institutions must implement a system for the measurement of their exposure to settlement risk, particularly in foreign exchange transactions. They need in particular to apprehend the different stages of the settlement process.

F. - System for measuring market risks

Article 53: Banks and financial institutions must record daily foreign exchange transactions in accordance with the governing provisions relating to the foreign exchange market. They must also record daily their transactions on their trading book.

When transactions on financial markets or foreign exchange markets carried out for their own account are significant, banks and financial institutions must implement specific systems to ensure their measurement, monitoring and control.

In this respect, they shall in particular:

- calculate the results of their transactions on their trading book; - measure their exposure to exchange risk per currency and for all currencies, and calculate their results; - assess the risks of counterparty settlement and settlement delivery on foreign exchange transactions or financial instruments; - assess the risk of price change of any financial instrument held. TITLE IV

SYSTEMS FOR MONOTORING AND CONTROLLING RISKS

A - General Provisions

Article 54: Banks and financial institutions must implement systems for monitoring and controlling credit risk, concentration risk, risks arising from interbank transactions, risk of interest rates, exchange rates, liquidity and settlement, bringing up internal limits and conditions under which these limits are observed.

Article 55: Systems for monitoring and controlling risks referred to above must include a system of global internal limits and if any operational limits at the level of various entities (departments, agencies, branches.). The different limits must be consistent with each other and with the risk measurement systems in place as well.

Article 56: Limits referred to in the above article are reviewed as necessary and at least once a year by the executive body and where necessary by the legislative body taking into account the equity of the bank or financial institution concerned.

Article 57: Banks and financial institutions must, according to formalized procedures adopt systems allowing:

.to ensure ongoing compliance with procedures and limits set; .to inform the entities or persons designated for this purpose about risk of exceeding limits, actual overruns and corrective actions proposed or undertaken. Exceeded limits must systematically be communicated in the shortest possible time to hierarchical level as well as to the person in the internal control system having the required to assess the scope; .to proceed to the analysis of the causes of non compliance with procedures and limits.

Article 58: Banks and financial institutions develop summary reports likely to allow them to monitor the amounts and evolution of their risks.

B. - Monitoring and controlling operational risks

Article 59: Banks and financial institutions shall acquire the appropriate means to control operational and legal risks. They ensure the control of these risks, especially those that may lead to the interruption of essential activities or attempt on their reputation.

To this end they set up plans for business continuity and test them periodically. They also ensure the security of their information systems under conditions provided for in articles 35 and 36 of this Regulation.

Article 60: Banks and Financial institutions shall record significant incidents resulting from deficiencies in compliance or in the design of internal procedures, including malfunctioning of computer systems, as well as internal or external frauds or attempted fraud. For this purpose, banks and financial institutions determine thresholds and registration criteria for incidents, appropriate to the nature of their activities and risks. Significant incidents shall, according to appropriate criteria, cover the risk of loss including when the latter has not materialized. Files of incidents shall be available to those responsible for permanent and periodic controls.

TITLE V

SYSTEM OF DOCUMENTATION AND ARCHIVING

Article 61: Banks and financial institutions shall develop manuals of procedures relating to their activities. These manuals must describe at a minimum, procedures for recording, processing and restitution of information, accounting schemes and procedures they initiate for their operations.

Article 62: Banks and financial institutions also develop a documentation specifying the means intended to ensure the proper running of the internal control systems, including:

- different levels of responsibility and powers granted ; - powers granted and the resources allocated to the running of control systems; - the rules ensuring the independence of these systems; - procedures relating to the security of information and communication systems; - description of the systems for measuring risks ; - description of the system for monitoring and controlling risks; - description of systems relating to respect of compliance; - procedures for the establishment and preservation of physical and electronic archives. This documentation shall upon request be available to the legislative body, to the auditors, the Banking Commission, the inspectors of the Bank of Algeria and if appropriate to the audit committee.

TITLE VI

RULES OF GOVERNANCE

Article 63: The responsibility to ensure that the bank or institution concerned complies with its obligations under this Regulation rests with be the executive and the legislative body. The latter shall be compelled to assess the effectiveness of internal control system and take any corrective action.

Article 64: The executive body and the legislative body shall seek to promote rules of ethics and integrity and create a culture of control within the bank or the financial institution. All staff shall understand its role in the internal control system and get involved actively.

Article 65: The executive body, the legislative body and where appropriate the audit committee shall define the type of information they wish to have especially in the form of relevant summary reports.

Article 66: The legislative body shall at least twice a year review the activity and results of internal control systems, based on the basis of information sent by the executive body and if appropriate by the audit committee. In the case of the existence of an audit committee the review may be done once a year.

At least once a year, the person in charge of periodic control shall report on its work to the legislative body.

Article 67: The executive body shall regularly inform the legislative body and if appropriate the audit committee, about essential elements and key lessons which may emerge from the extent of the risks to which the bank or the financial institution is exposed. Such information shall include in particular the distribution of commitments by sets of counterparties and the profitability of credit operations as provided for in articles 39, 41, 44 and 47 of this Regulation.

Article 68: In case the legislative body is not involved in setting limits, the executive body must inform the legislative body of decisions taken in this regard. The latter shall be communicated also to the audit committee if such exists. In addition, at least once a year, the executive body must inform the legislative body of the conditions under which these limits are observed.

Article 69: The executive body shall promptly inform the legislative body of significant incidents identified by the internal control system, particularly with regard to overrun risk limits or internal or external fraud.

Article 70: Reports established by the entities in charge of permanent and periodic controls shall be communicated to the executive body and at its request, to the legislative body and if necessary, to the audit committee.

The audit committee is especially in charge of:

- checking the clarity of information provided and of making an assessment of the regularity and relevance of the accounting procedures adopted in preparing the financial statements;

- make an assessment of the quality of the internal control system, in particular the consistency of systems for measuring, monitoring, managing and controlling risks and propose further action in this regard.

Article 71: Banks and financial institutions shall develop at least once a year a report on the conditions in which the internal control provided for in this Regulation is performed. This report includes in particular:

- a description of significant changes that occurred in the organization of the internal control system and the various control systems during the period under review; - a description of the main actions undertaken under permanent control; - an inventory of surveys conducted by the periodic control, key lessons particularly with regard to deficiencies identified, and corrective measures undertaken ; - a description of the conditions under which procedures are implemented for new activities; - a presentation of the main initiatives planned concerning internal control . Depending on the nature of the activities performed, the report includes specific comments on various risks listed in article 2 above.

Article 72: Banks and financial institutions shall develop at least once a year a report on the measurement and monitoring of the risks to which they are exposed. This report includes in particular the essential elements and key lessons that may emerge from the evaluation of the risks to which they are exposed- credit risk selection and also the analysis of the profitability of credit operations- This report also presents the most significant incidents identified in the file provided for in article 60 above and the corrective measures taken.

Article 73: The two annual reports provided for in articles 71 and 72 above shall be communicated to the legislative body and if necessary to the audit committee. The two reports are communicated to the Banking Commission before the end of the semester following the period under review and they are made available to auditors.

Article 74: The provisions of Regulation 02-03 of Ramadhan 9th, 1423 corresponding to November 14th, 2002 relating to the internal control of banks and financial institutions shall be repealed.

Article 75: This Regulation shall be published in Journal Officiel of the People’s Democratic Republic of Algeria.

The Governor Mohammed Laksaci