Egypt Adopts Stringent “Know Your Customer” Regulations to Combat Financial Crimes
Egypt has implemented stringent regulations requiring financial institutions to adopt a “know your customer” (KYC) principle to combat money laundering, fraud, and financial terrorism.
Background
In 2001, Egyptian Minister of Supply and Internal Trade Decree No. 906 was issued, obligating custodians to register personal data of customers with whom they have signed securities account management contracts on the database of the securities accounts management system. This includes:
- National ID or customer ID number
- Date of birth
- Type of customer (male/female)
- Nationality
- Religion
- Legal form
- Address
- Telephone and fax numbers
- Other means by which a client can be identified
Regulations
The regulations also require financial institutions to comply with Decree No. 120 of 2019, which sets out controls in the field of combating money laundering and terrorist financing for entities operating in non-bank financial activities. Refusing to fill out a know your customer application is considered one of the suspicious actions according to the law.
Definition of “Funds”
The Egyptian Anti-Terrorism Law No. 94 of 2015 defines the term “funds” as:
- All physical and virtual assets, including oil and other natural resources or property of any kind, transferred or fixed
- Digital or electronic form, bank credit, bank checks and documentary credits
- Any interest, profits or sources of income derived from or generated by such funds
Definition of Terrorist Financing and Liability
The law defines terrorist financing and determines the liability for those who engage in such activities. The term “terrorist action” means:
- Any use of force, violence, threats, or intimidation at home or abroad to disturb public order or endanger community safety, interests or security
Importance of KYC Regulations
The implementation of KYC regulations is crucial in dealing with currency and virtual assets to avoid money laundering, fraud, and financial terrorism. Egypt has taken strong measures towards money laundering and financial terrorism, and all national and international banks are required to comply with these measures to decrease the crimes occurring in that field.
By adopting a “know your customer” principle, Egypt aims to prevent the misuse of currency and virtual assets, ultimately ensuring a safer and more secure financial system.