Financial-crime authorities across the Middle East and North Africa hold powers that look adequate on paper but fail in practice, with anti-corruption agencies unable to freeze assets, prosecutors acting as political gatekeepers, and high-risk sectors filing almost no suspicious transaction reports, according to a new Transparency International report.

The 65-page report, “Closing the Gaps: Detecting and Investigating Corrupt Money Flows in the Middle East and North Africa,” examines Algeria, Egypt, Jordan, Lebanon, Libya, Morocco, Palestine and Tunisia, drawing on more than 70 documented cases, country questionnaires and Financial Action Task Force (FATF) mutual evaluations. 

“Most investigatory powers meet the FATF standards on paper, but practical challenges remain,” the advocacy group said. 

The six countries with available FATF assessments are rated either compliant or largely compliant with Recommendations 30 and 31, the standards governing the responsibilities and powers of law enforcement. Yet “even where sufficient powers exist on paper, their effectiveness depends on how authorities use them in practice,” Transparency International said.  

Anti-corruption agencies in Algeria and Egypt cannot independently freeze or seize assets, Morocco bars law enforcement from using covert digital techniques in money-laundering cases without a judicial order, and in Egypt, Jordan, and Tunisia, only public prosecutors can open criminal corruption investigations, creating what Transparency International called a “structural bottleneck” vulnerable to political pressure.

The timing of asset freezes also differs sharply across the region, the report said. FIUs in Jordan, Libya, Palestine and Tunisia can administratively suspend transactions for only three to five working days. Egypt’s FIU cannot freeze at all without prosecutorial sign-off. Lebanon, by contrast, gives its FIU renewable six-month freezing authority, extendable to a year on foreign requests, because it acts as a quasi-judicial body. 

“Especially in cross-border cases, where speed is critical, the relay from a financial intelligence unit to a prosecutor to a court introduces delays that suspects can exploit,” TI said.

Regulatory reporting is separately skewed away from corruption, the report found. Corruption-related suspicious transaction reports (STRs) accounted for only five percent of submissions in Algeria, three percent in Egypt, and five percent in Lebanon. High-risk non-financial sectors filed almost no STRs. 

Based on the case studies cited in the report, Transparency International concluded that there are clear typologies for corruption that can be found throughout the region. In many cases, corrupt officials use falsified invoices and certificates to disguise embezzlement that can reach into the hundreds of millions of dollars.

Stolen funds are then often turned over to family members and other proxies. Anti-money-laundering systems in the region “generally treat family members and close associates of politically exposed persons passively, resulting in blind spots in detection,” TI said.  

The organization separately flagged “underused” mutual legal assistance treaties and generally ineffective data collection and data-sharing when it comes to corporate beneficial owners and asset declarations of public officials.  

“No country in the region has interoperable systems that would allow investigators to connect company ownership, land registry, beneficial ownership, and declaration data in a single query,” the report said.