Egypt Cracks Down on Financial Crimes: A Look at the Nation’s Anti-Money Laundering Laws and Regulations

The international community’s efforts to combat money laundering and terrorist financing started in the late 1980s, leading to significant legal developments such as the United Nations Convention Against Illicit Traffic in Narcotic Drugs and Psychotropic Substances (1988) and the establishment of the Financial Action Task Force (FATF) in 1989.

International Legal Frameworks: The UN Convention and FATF

1. The United Nations Convention Against Illicit Traffic in Narcotic Drugs and Psychotropic Substances:

   • Combat economic might of criminal organizations and individuals
   • Strip them of ill-gotten gains and dismantle illegal enterprises
   • Money laundering defined: conversion or transfer of property with knowledge that it derives from drug trafficking or other serious offenses

2. The Financial Action Task Force (FATF):

   • Intergovernmental body serving as a global watchdog against money laundering and terror financing

Egypt’s Response: Law No. 80 of 2002 on Combating Money Laundering (CML Law)

• Enacted in response to the global push for stronger defenses against money laundering
• Makes it a criminal offense to knowingly conceal, disguise, or prevent the discovery of funds derived from predicate offenses
• Money laundering considered an independent offense

Egyptian Legal System Requirements

• Evidence required to prove funds are proceeds of a predicate offense
• Crucial safeguard for protecting the presumption of innocence

Expanding Efforts: Anti-Money Laundering and Counter-Terrorist Financing (AML/CTF) Framework

1. MLCU:

   • Dedicated unit operating within the Central Bank of Egypt
   • Receives, analyzes, and distributes suspicious transaction reports (STRs)
   • Collaborates with international organizations and counterparts in over 20 countries

2. Regulations:

   • Definition of ‘funds’ expanded to include a wide range of assets
   • Scope of underlying predicate offenses has been extended
   • Terrorist financing added to the CML Law in 2014, leading to the MLCU’s name change

3. Regulations for Financial Institutions and Regulated Entities:

   • Obligation to report any transactions suspected of being related to proceeds of crime to the MLCU
   • Establish adequate compliance systems (customer due diligence processes and preventative procedures set by the MLCU)

4. Non-Financial Businesses and Professions:

   • Report any suspicion of money laundering or terrorist financing when it arises in the course of their work
   • Failure to comply can result in imprisonment, a fine of up to EGP 500,000, or both, and the suspension of their practicing certificate

Measures Taken by Egypt to Prevent Money Laundering and Terrorist Financing

1. Limiting the Use of Cash and Promoting Electronic Payment Mechanisms
2. Incentivizing Individuals and Small Businesses to Enter the Banking System
3. Strengthening International Judicial Cooperation

Conclusion

Egypt’s responses to the global push for stronger defenses against money laundering and terrorist financing include enacting Law No. 80 of 2002 on Combating Money Laundering, joining the FATF, and expanding its Anti-Money Laundering and Counter-Terrorist Financing framework. The nation has shown a commitment to implementing effective measures to combat these financial crimes.