Financial Crime World

Egypt’s Financial Institutions Must Comply with Stringent Anti-Money Laundering Regulations

The Egyptian government has taken significant steps to combat money laundering and terrorist financing within its borders, and financial institutions operating in the country must be aware of the compliance requirements.

The Threat of Money Laundering

Money laundering poses a significant threat to the stability and integrity of financial systems worldwide. Egypt, like many other countries, has enacted comprehensive anti-money laundering (AML) legislation and established regulatory authorities to combat money laundering effectively.

The primary legal framework for AML in Egypt is the Money Laundering Law No. 80 of 2002, which establishes the legal basis for preventing and combating money laundering in the country. Additionally, Egypt has ratified various international conventions and agreements related to AML, including:

  • The United Nations Convention against Corruption
  • The Arab Convention for Combating Corruption

Regulatory Authority for AML Supervision and Enforcement

The primary regulatory authority responsible for AML supervision and enforcement in Egypt is the Money Laundering Combating Unit (MLCU), which operates under the Central Bank of Egypt (CBE). The MLCU plays a pivotal role in implementing AML policies and ensuring compliance.

Requirements for Financial Institutions and DNFBPs

Financial institutions and designated non-financial businesses and professions (DNFBPs) are required to conduct thorough customer due diligence measures when establishing business relationships with customers. This includes:

  • Identifying the customer
  • Verifying their identity using reliable sources
  • Assessing the nature of the customer’s business

Entities subject to AML regulations must also report any suspicious transactions to the MLCU without tipping off the customer.

Record-Keeping Requirements

Financial institutions and DNFBPs must maintain records of transactions, customer identification data, and other relevant documentation for a specified period, as prescribed by law. This ensures that transaction trails are available for regulatory review and investigation.

Employee Training and Awareness

Employees within financial institutions and DNFBPs should receive regular training and awareness programs on AML regulations and procedures to ensure that staff are well-informed and capable of identifying suspicious activities.

Risk-Based Approach to AML Compliance

Entities subject to AML regulations are encouraged to adopt a risk-based approach to AML compliance, which means assessing and mitigating money laundering risks based on the nature and complexity of their business activities.

Penalties for Non-Compliance

Egypt takes AML compliance seriously and imposes significant penalties for non-compliance. These penalties can include:

  • Fines
  • Imprisonment
  • Revocation of licenses
  • Forfeiture of assets

Financial institutions and DNFBPs found in violation of AML regulations may face severe consequences.

International Cooperation

In addition to its domestic efforts, Egypt actively participates in international efforts to combat money laundering and terrorist financing. It cooperates with various international organizations, such as:

  • The Financial Action Task Force (FATF)
  • The Egmont Group of Financial Intelligence Units

to share information and enhance AML measures globally.

Enhancing the AML Framework

As of September 2021, Egypt has been actively enhancing its AML framework to align with international standards. Businesses operating in Egypt must remain vigilant and fully comply with AML regulations to avoid severe penalties and contribute to the global fight against money laundering.