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Egypt’s Financial Institutions Face Compliance Program Requirements
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In Egypt, financial institutions such as banks and other entities performing regulated activities are required to establish internal systems and controls to ensure compliance with applicable laws and regulations. According to the Banking Law and various laws governing non-banking financial activities, these institutions must have a comprehensive compliance program in place.
Central Bank of Egypt (CBE) Oversight
The Central Bank of Egypt plays a crucial role in overseeing the banking sector, with the power to approve the first board of directors of any bank before its appointment. Additionally, banks must obtain prior approval from the CBE governor before appointing senior individuals.
Securities Sector Governance
In the securities sector, companies carrying out regulated activities are subject to governance rules adopted by the Financial Regulatory Authority (FRA). These rules set conditions for the composition of the board of directors and impose certain responsibilities on directors and senior managers.
Director and Senior Manager Responsibilities
Directors and senior managers of financial services firms in Egypt are required to perform their duties according to certain principles, including:
- Compliance with applicable rules and regulations
- Cooperation with full credibility and transparency with the CBE
- Avoidance of conflict of interests
- Information disclosure and transparency when dealing with retail customers
- Notification of any major breach to the CBE
Accountability for Non-Compliance
In cases where financial services firms fail to comply with regulatory requirements, directors and senior managers may be held individually accountable for their actions. The person in charge of the effective management of a juristic person shall be punished with the same sanctions provided for under the relevant regulating laws if they were aware of the punishable act and the violation was committed due to their default on job obligations.
Private Rights of Action
Private rights of action also apply to violations of national financial services authority rules and regulations. Customers may file complaints to the FRA in cases where a regulatory rule or requirement is breached, and the FRA may take disciplinary actions against the breaching company. Additionally, contractual and tort liabilities provided for under the Civil Code may be applicable to compensate any losses.
Standard of Care
The standard of care that applies to financial services firms and authorized persons when dealing with retail customers is set by laws and regulations governing banking and non-banking activities in Egypt. This includes:
- Confidentiality of customers’ accounts and information
- Protection of customers’ rights
- Other standards of care
There is no distinction in the standard of care based on the sophistication of the customer or counterparty.
Adoption of New Legislation
Rules that affect the financial services industry in Egypt are adopted through legislation, decrees, and regulations issued by the relevant national regulatory authority. The process for adopting new legislation typically includes a consultation phase with stakeholders, experts, and market players.
Accuracy Statement
The information provided is accurate as of February 2021.