Egyptian Crackdown on Money Laundering and Terrorist Financing: A Modern Approach Rooted in Traditional Principles
In response to the global crackdown on money laundering and terrorist financing in the late 1980s, Egypt enacted Law No. 80 of 2002 on Combating Money Laundering (CML Law). This legislation aimed to seize the economic power of criminal organizations and individuals by confiscating their ill-gotten gains and dismantling illegal enterprises.
Definition of Money Laundering
According to article 2 of the CML Law, money laundering involves:
- the conversion or transfer of property derived from a criminal offense for the purpose of concealing or disguising the illicit origin of the property, or
- assisting the perpetrator in evading the legal consequences.
The international community expanded the scope of the underlying criminal activity to include a variety of serious offenses.
Establishment of the Financial Action Task Force (FATF)
The CML Law gave rise to the Financial Action Task Force (FATF) in 1989, an intergovernmental body mandated to promote policies and standards for combating financial crimes. The FATF’s agenda was later expanded to include terrorist financing. Although the distinction between money laundering and terrorist financing lies in the source of the funds, the techniques used to launder the proceeds are similar.
Strengthening Egypt’s AML/CTF Framework
In response to international efforts, Egypt passed a series of regulations, including:
- Executive Regulations 137
- 197
- 169
These regulations aimed to strengthen the CML Law and disrupt money laundering and terrorist financing activities.
Requirement of Proving Predicate Offense
Under Egyptian law, an individual is guilty of a money laundering offense if they know the funds in question are derived from a predicate offense and intentionally convert, transfer, or conceal the proceeds. However, proving this requirement is a common challenge in money laundering cases, given the presumption of innocence and the need to uphold the rule of law.
The Egyptian Cassation Court upheld this requirement in case no. 12808 for the Judicial Year 82, emphasizing the importance of proving the predicate offense before a conviction for money laundering can be sustained.
Egyptian Authorities’ AML/CTF Measures
Egyptian authorities have taken proactive steps to strengthen their AML/CTF framework with the Money Laundering Combat Unit (MLCU) and extensive regulations. These regulations have been updated to include a broader range of funds, the definition of terrorist financing, and new obligations for designated non-financial businesses and professions.
Egypt’s Participation in International Efforts
Egypt has actively participated in international efforts to combat money laundering and terrorism financing. This includes:
- Ratification and implementation of various UN, Arab, and bilateral conventions
- Establishment of the National Committee for Coordination in Combating Corruption
Balancing Modern Standards and Traditional Principles
Egypt’s approach to combating financial crimes balances the need for modern international standards with the country’s traditional legal principles. By preserving the presumption of innocence and the sanctity of personal property, Egypt has maintained the core values of its legal system while making advancements in its anti-money laundering and counter-terrorist financing framework.