Tunisia

 

ANTI-MONEY LAUNDERING

FATF Status

Tunisia is no longer on the FATF List of Countries that have been identified as having strategic AML deficiencies

 

Latest FATF Statement  -  18 October 2019

The FATF welcomes Tunisia's significant progress in improving its AML/CFT regime and notes that Tunisia has strengthened the effectiveness of its AML/CFT regime and addressed related technical deficiencies to meet the commitments in its action plan regarding the strategic deficiencies that the FATF identified in November 2017. Tunisia is therefore no longer subject to the FATF's monitoring process under its ongoing global AML/CFT compliance process. Tunisia will continue to work with MENAFATF to improve further its AML/CFT regime.

Compliance with FATF Recommendations

The latest follow-up to the Mutual Evaluation Report relating to the implementation of anti-money laundering and counter-terrorist financing standards in Tunisia was undertaken in 2019. According to that Evaluation, Tunisia was deemed Compliant for 8 and Largely Compliant for 21 of the FATF 40  Recommendations.

 

US Department of State Money Laundering assessment (INCSR)

 

Tunisia was deemed a ‘Monitored’ Jurisdiction by the US Department of State 2016 International Narcotics Control Strategy Report (INCSR). Key Findings from the report are as follows: -

Tunisia is not considered a regional financial center. Tunisia has strict currency exchange controls, which authorities believe mitigate the risk of international money laundering.  There is a low level of organized crime in Tunisia. The primary domestic criminal activities that generate laundered funds are clandestine immigration, trafficking in stolen vehicles, and narcotics. Weapons, narcotics, and suspect cash have been seized in many Tunisian cities, some of which are near the borders with Libya or Algeria. Reports of corruption and financial crimes have been increasing since the 2011 revolution.  The smuggling of weapons and contraband through Tunisia is used to support terrorist groups, including al-Qaida in the Islamic Maghreb. Tunisia is especially concerned about militants entering from adjacent Libya.

Money laundering occurs through the financial sector, especially through informal economic activity involving smuggled goods. Since Tunisia has strict currency controls, it is likely that underground remittance systems such as hawala are prevalent. Trade-based money laundering is also a concern. Throughout the region, invoice manipulation and customs fraud are often involved in hawala counter-valuation.  Tunisia has two free trade zones, in Bizerte and Zarzis.

Tunisia has seven offshore banks, and the number of companies with foreign participation is 1,780, of which 1,105 are offshore international business companies (IBCs).

EU Tax Blacklist

Tunisia was removed from EU Tax Blacklist on 23 January 2018 following "commitments made at a high political level to remedy EU concerns".

SANCTIONS

The EU has imposed restrictive measures directed against certain persons, entities and bodies in view of the situation in Tunisia, specifically those responsible for the misappropriation of Tunisian State funds.

The Arab League (comprising 22 Arab member states), of which this country is a member, has approved imposing sanctions on Syria. These include: -

  • Cutting off transactions with the Syrian central bank

  • Halting funding by Arab governments for projects in Syria

  • A ban on senior Syrian officials travelling to other Arab countries

  • A freeze on assets related to President Bashar al-Assad's government

 

The declaration also calls on Arab central banks to monitor transfers to Syria, with the exception of remittances from Syrians abroad.

The Arab League has also boycotted Israel in a systematic effort to isolate Israel economically in support of the Palestinians, however, the implementation of the boycott has varied over time among member states. There are three tiers to the boycott. The primary boycott prohibits the importation of Israeli-origin goods and services into boycotting countries. The secondary boycott prohibits individuals, as well as private and public sector firms and organizations, in member countries from engaging in business with any entity that does business in Israel. The Arab League maintains a blacklist of such firms. The tertiary boycott prohibits any entity in a member country from doing business with a company or individual that has business dealings with U.S. or other firms on the Arab League blacklist.

BRIBERY & CORRUPTION

Rating                                                                           (100-Good / 0-Bad)

Transparency International Corruption Index                           43

World Governance Indicator – Control of Corruption             54

Moderate risks of corruption are an obstacle for businesses investing in Tunisia. The country suffers from a culture of nepotism and cronyism, which are found throughout the government. These practices spurred popular upheavals in 2010, leading to the fall of the government in early 2011. Despite the uprisings of the Arab Spring, corruption is still rampant. High-level corruption is said to be replaced by petty corruption. Tunisia's Penal Code criminalizes several forms of corruption, including active and passive bribery, abuse of office, extortion and conflicts of interest, but the anti-corruption framework is not effectively enforced, although the government has been taking preliminary steps to implement the laws (HRR 2016). Businesses may encounter bribery, extortion or facilitation payments, particularly in the public procurement sector. Even though gift-giving and gift-receiving are criminalized, these practices are commonplace in Tunisia. For further information - GAN Integrity Business Anti-Corruption Portal

ECONOMY

Tunisia's diverse, market-oriented economy has long been cited as a success story in Africa and the Middle East, but it faces an array of challenges following the 2011 Arab Spring revolution. Following an ill-fated experiment with socialist economic policies in the 1960s, Tunisia embarked on a successful strategy focused on bolstering exports, foreign investment, and tourism, all of which have become central to the country's economy. Key exports now include textiles and apparel, food products, petroleum products, chemicals, and phosphates, with about 80% of exports bound for Tunisia's main economic partner, the EU.

Tunisia's liberal strategy, coupled with investments in education and infrastructure, fuelled decades of 4-5% annual GDP growth and improving living standards. Former President Zine el Abidine BEN ALI (1987-2011) continued these policies, but as his reign wore on cronyism and corruption stymied economic performance, and unemployment rose among the country's growing ranks of university graduates. These grievances contributed to the January 2011 overthrow of BEN ALI, sending Tunisia's economy into a tailspin as tourism and investment declined sharply.

 

Since its establishment in late 2014, Tunisia’s new government has faced challenges reassuring businesses and investors, bringing budget and current account deficits under control, shoring up the country's financial system, lowering high unemployment, and reducing economic disparities between the more developed coastal region and the impoverished interior. In 2015, successive terrorist attacks against the tourism sector and worker strikes in the phosphate sector, which combined account for nearly 15% of GDP, slowed growth to less than 1% of GDP.

 

Agriculture - products:

olives, olive oil, grain, tomatoes, citrus fruit, sugar beets, dates, almonds; beef, dairy products

 

Industries:

petroleum, mining (particularly phosphate, iron ore), tourism, textiles, footwear, agribusiness, beverages

 

Exports - commodities:

clothing, semi-finished goods and textiles, agricultural products, mechanical goods, phosphates and chemicals, hydrocarbons, electrical equipment

 

Exports - partners:

France 28.5%, Italy 17.2%, Germany 10.9%, Libya 6.1%, Spain 4.2% (2015)

 

Imports - commodities:

textiles, machinery and equipment, hydrocarbons, chemicals, foodstuffs

 

Imports - partners:

France 19.4%, Italy 16.4%, Algeria 8.2%, Germany 7.4%, China 6% (2015)

Investment Climate  -  US State Department

Tunisia maintained the forward momentum of its democratic transition in 2015 despite economic hardship and two terrorist attacks that targeted its important tourism sector. Tunisia’s first democratically elected government took office in February 2015 with an ambitious reform agenda and high expectations for economic growth.

 

Prime Minister Habib Essid’s government has made substantial progress on much-needed structural reform, including passing new public-private partnership, competition, bankruptcy and renewable energy laws; safeguarding the independence of the central bank through a new central bank law; and expanding the franchising sector. The United States and other donors are partnering with the government to achieve outstanding reforms, including a revised investment code and reforms on banking, taxes, and customs. Enacting these reforms will ensure Tunisia’s economic framework is capable of attracting and expanding foreign and domestic investment in this important partner nation.

Tunisia’s strengths are its proximity to Europe, relatively educated workforce, and positive attitude toward foreign direct investment (FDI). Historically, most investments were in mechanic and electronic manufacturing and textiles. Today, the economy is more dynamic. Sectors such as agribusiness and ICT are increasingly promising. Tunisia was the largest exporter of olive oil globally in 2015.

 

There is potential for significant improvement to the business climate by the end of 2016. As economic reforms are adopted by the Parliament and implemented by the government, the business climate is expected to improve with more simple, clear, and transparent regulations. The United States and Tunisia co-chaired a high-level Joint Economic Commission in May 2016, dedicated to increasing private sector employment.

 

Substantial barriers to investment remain. State-owned enterprises play a large role in Tunisia’s economy, and some sectors are not open to foreign investment. The informal sector, estimated to be between 40-60 percent of the overall economy, continues to pose difficulties to companies forced to compete with smuggled goods. While waiting for a new investment code and finance law, investors face regulatory uncertainty.

 

The United States has provided more than $360 million in economic growth-related activities since 2011, including loan guarantees in 2012 and 2014 enabling the GOT to borrow nearly $1 billion to help stabilize government finances, ongoing support for small and medium enterprises, and technical assistance to implement economic reform.

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4 September 2012  -  Extract from IMF Report: Tunisia: 2012 Article IV Consultation—Staff Report:

"Tunisia’s anti-money laundering and combating the financing of terrorism (AML/CFT) framework was assessed in 2006 against the AML/CFT standard, the Financial Action Task Force (FATF) 40+9 Recommendations. The evaluation was conducted by the World Bank in the context of the FSAP update. The final report indicated that Tunisia had adopted an AML/CFT law, and the criminalization of money laundering and the financing of terrorism were broadly in line with international standards. However, key weaknesses remained, including the absence of a legal basis for freezing funds in accordance with United Nations Security Council Resolution 1267 and 1373, the inability of the financial sector supervisors to engage in international cooperation, and deficiencies related to the identification of beneficial owners. Recent political changes in Tunisia and related efforts to trace and identify stolen assets have highlighted significant challenges in the implementation of the existing AML/CFT framework. In line with the authorities’ intention to strengthen their AML /CFT framework, it has been agreed that a new assessment of the AML/CFT regime should be conducted towards the end of 2012."

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Country Links

Tunisian Financial Analysis Committee (CTAF)​
Central Bank of Tunisia
Other Useful Links
FATF
US State Department
Transparency International
World Bank
CIA World Factbook

Sanctions

EU  -  Financial

FATF AML Deficient List

Removed from list in October 2019

Higher Risk

Not on EU White list equivalent jurisdictions
Failed States Index (Political Issues)(Average Score)
Offshore Finance Centre

Medium Risk

Compliance with FATF 40 + 9 Recommendations
Corruption Index (Transparency International & W.G.I.)
World Governance Indicators (Average Score)

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