The news spread like wildfire among insiders, on the Tunisian street and in the annex of the Central Bank of Tunisia BCT) where the CTAF (Tunisian Financial Analysis Committee) is located.
An administrative (tax police) and judicial raid led to the arrest of the CTAF’s secretary-general at around 5pm last Friday. Although she has since been released, she remains under investigation, with all possible judicial and border precautions being taken.
The theory of the tank and the fly
Apart from the substance of this case, which is not the subject of our article, it is the official silence that surrounds it. For the time being, no one knows about it, and no one other than the judiciary knows the details of this raid, which could be a search based on files from another ministry at the head of the CTAF, and its consequences.
According to the fragmentary information we have received, this case could potentially pose risks to Tunisia’s financial stability, international reputation and governance. These risks come on top of the poisonous atmosphere that now prevails in the premises of the Musée de la Monnaie, where the CTAF is based, and even in the corridors of the BCT, which was reportedly not even informed before the police raid and the arrest of the CTAF’s secretary-general, whose small staff is in shock and has lost all desire to work and participate in the president’s “war of liberation”.
A different handling of this case by the authorities, with a more thorough investigation of the initial financial factors that triggered the police raid and greater discretion, would have been crucial in minimizing these risks and maintaining the confidence of the country’s economic and financial partners.
The specter of 2018, when Tunisia was suspended from the FATF and thus from the international community, looms large again after this police raid. The CTAF is a key institution in the fight against money laundering and terrorist financing in Tunisia. Two crucial issues for economic stability and the confidence of international partners.
What about the impact on Tunisia’s international image?
The arrest of a leading figure in a financial regulatory institution could damage Tunisia’s image abroad.
It must be said that the communication surrounding the case, or even the absence of structured, clear and coherent communication, is disastrous for the future of this administrative financial intelligence unit! It should be remembered that the CTAF, which works on the basis of confidential information and sometimes international intelligence, plays a central role in ensuring that Tunisia complies with international standards of financial transparency.
If this arrest is linked to acts of corruption or mismanagement, it could undermine the confidence of international institutions such as the FATF (Financial Action Task Force) or foreign investors.
The shadow of reappearance on watch lists
In 2020, Tunisia was removed from the FATF blacklist. It was no easy feat! The current SG, who was an analyst at the time, contributed to this. This has certainly earned her this high position of responsibility since March 2023.
Although the CTAF is chaired by the Governor of the Central Bank of Tunisia, its decision-making body remains the Steering Committee.
In addition to the Governor, it includes: ‘a third-class magistrate’, ‘an expert representing the Ministry of the Interior’, ‘an expert from the Ministry of Finance representing the Directorate General of Customs’, ‘an expert representing the Financial Market Council’, ‘an expert representing the Ministry of Telecommunications’, an expert representing the General Insurance Committee,’ ‘an expert specializing in the fight against financial crime’, ‘an expert representing the Microfinance Supervisory Authority’, ‘an expert representing the anti-corruption authority’, ‘an expert from the BCT representing the General Directorate of Financial Control’.
All of the above are appointed by government decree for a period of six years, with a third of the members being replaced every two years!
In other words, there are many safeguards, multiple filters and redoubled precautions.
Removal from the grey list came at the price of a major effort to improve the framework for combating money laundering and terrorist financing. If major dysfunctions within the CTAF are uncovered, this could lead to Tunisia’s return to these watch lists.
The cost of not having a CTAF
We know the result only too well, having experienced it under the Chahed government: higher costs for Tunisian companies in international financial transactions and a deterioration in foreign investment.
At the time, the government, which history has clearly shown was at fault, blamed the BCT and the then governor, the late Chedli Ayari, was forced to resign. Is this a remake? Perhaps from now on, those who want the CTAF to act as an investigator and financial prosecutor should change the law, attach the CTAF to the Presidency or the Ministry of Justice and give it more resources so that it will not again be obliged to present the Governor of the BCT with information and sums of money of which he has no knowledge!
The economy and investment will also be affected. As in 2018, the business climate could be negatively affected. Fears now revolve around a heightened perception of corruption or instability within regulatory institutions. This could deter potential investors, who need guarantees of governance and stability before committing to economic projects in Tunisia.
As in 2018, it could also delay access to certain financial markets or the signing of agreements with international lenders. Could the authorities have opened a Pandora’s box by mishandling the communication of a classic court case?
Internal confidence and communicated reforms
At the national level, this arrest could affect Tunisians’ perception of the ability of national institutions to function with integrity and independence. It should not be forgotten that the body in charge of the fight against corruption is at a standstill.
The chairman of the confiscation authority is in prison, as are several senior officials of public companies, notably banks, who have not yet been brought to justice.
However, if this arrest is part of an active fight against corruption and an increase in transparency, it could strengthen the country’s commitment to reforming its financial system and improving public governance. Implementing and publicizing reforms will help to educate partners.
In a delicate political context, this arrest could also exacerbate internal tensions. As we already know, the services of the CTAF are at a standstill.
According to media reports, a dozen of its managers and analysts are being questioned. Under what conditions could they return to work? Who would be foolish enough to agree to join the CTAF, given the risks involved?
Moreover, this arrest could be used by certain political actors to weaken or discredit the government or the institutions, in particular the BCT. It has been noted that social networks and chat rooms are even talking about a strike by CTAF and BCT staff, and even the blocking of certain BCT activities!
This could lead to increased instability, especially if there is any suspicion of political interference in this case.
