Egypt’s Central Bank Introduces New Regulations to Combat Money Laundering and Terrorism Financing

The Central Bank of Egypt (CBE) has introduced new regulations to strengthen its efforts to combat money laundering and terrorism financing. These regulations apply to all banks operating in Egypt, their branches abroad, and foreign banks operating locally. The new measures aim to adopt best international practices and bolster existing ones.

Key Requirements for Banks

1. Compliance by Foreign Branches and Subsidiaries: Banks must ensure that their foreign branches and majority-owned subsidiaries follow anti-money laundering and terrorism financing measures, even if these measures are more stringent than those applied in the host country.
2. Proactive Approach: Banks must adopt a more proactive approach in identifying and reporting suspicious operations.

Indicators of Suspicious Transactions

Banks must monitor and report the following transactions, which may indicate money laundering or terrorism financing:

• Large or Frequent Cash Transactions: Cash deposits or withdrawals that are large or frequent and inconsistent with a customer’s profile or activity.
• Cash Deposits: Cash deposits from various individuals or entities into a customer’s account without a clear purpose or relationship.
• Multiple Cash Transactions: Cash transactions at multiple branches within a short period followed by cash withdrawals or transfers to other accounts without justification.
• Significant Cash Withdrawals: Large cash withdrawals in credit accounts that result in significant credit balances without explanation.
• Foreign Currency Purchases: Significant cash purchases and sales of foreign currencies without a clear need for foreign exchange transactions.
• Banknote Exchanges: Exchanging large amounts of banknotes from small to large denominations without justification.
• Transfer Patterns: Transfers of large or frequent amounts, especially with cash payment instructions, that are not consistent with the customer’s profile or activity.
• Repeated Transfers: Repeated or unexplained transfers to or from different parties or foreigners, especially from high-risk regions or suspected countries.

Suspicious External Transfers

Banks must be vigilant for transfers of large or frequent amounts that don’t align with a customer’s profile or activity and transactions to or from high-risk countries, regions, or customers as determined by Egypt’s risk assessment.

Detecting and Preventing Money Laundering and Terrorism Financing through Trade Financing Operations

The regulations introduce measures to detect and prevent money laundering and terrorism financing through trade financing operations. Banks should monitor transactions involving shipping goods to or from high-risk countries. Discrepancies in the description or value of goods and unusual payment terms are also red flags.

Importance of an Effective Anti-Money Laundering and Terrorism Financing Framework

The CBE highlights the importance of a robust anti-money laundering and terrorism financing framework and emphasizes the need for regular monitoring and reporting of suspicious transactions.

By adhering to these regulations, Egyptian banks can enhance their reputation, protect their business, and make a significant contribution to the global fight against financial crime.