Financial Crime World

Egypt’s Financial Landscape: Battling Money Laundering in the Face of Growth and Informal Economy

In the heart of the Mediterranean, Egypt’s financial scene is undergoing a transformation. Egypt’s expanding economy and strategic geographical position make it an increasingly important hub for financial transactions. however, this newfound economic prominence comes with the threat of financial crimes, particularly money laundering. Egyptian authorities and financial institutions must contend with this issue to safeguard their financial system.

Money Laundering: What is it and Why is it a Concern in Egypt?

  • Money laundering refers to the act of concealing the origin of illegally-gained funds by disguising them as legitimate income.
  • Illegal activities such as drugs, human trafficking, and corruption generate funds for money laundering.
  • Money laundering can facilitate further criminal activities and distort economic developments.

Egypt’s Vulnerabilities: An Informal Economy and Cash-Based Transactions

  • The Financial Action Task Force (FATF) considers Egypt at risk of money laundering due to its significant informal sector (up to 40% of GDP).
  • Approximately two-thirds of the population lacks access to formal banking services, leading to widespread use of cash transactions.
  • This situation exposes Egypt to immense financial risks.

Government Initiatives to Address the Issue

  • To promote financial inclusion, Egypt’s central bank and the Federation of Egyptian Banks introduced measures to incentivize individuals and small businesses to join the formal financial sector.
  • The National Council for Payments (NCP) was established in 2017 to limit cash usage, encourage electronic payment methods, and integrate citizens and businesses into the banking system.
  • These efforts have led to a significant increase in mobile payment accounts, with approximately 9 million currently in use.
  • The Central Bank of Egypt plays an instrumental role in combating money laundering in Egypt.
  • Several laws and regulations are in place to counter money laundering in Egypt, including:
    • Law No. 80 of 2002 on Combating Money Laundering (as amended)
    • Executive Regulations of Law No. 80 of 2002 on Combating Money Laundering and Terrorism Financing
    • Anti-Money Laundering Unit’s (AMLU) guidelines on risk-based approach and customer due diligence (CDD)
    • Decree No. 8 of 2019 on the rules and procedures for combating money laundering and terrorist financing for non-profit organizations

Compliance and Penalties for Non-Compliance

  • Financial institutions in Egypt are required to comply with anti-money laundering (AML) regulations.
  • Failure to comply with these regulations can result in severe penalties, including imprisonment and hefty fines, as well as reputational damage.

Financial Institutions’ Role in Combatting Money Laundering

  • To effectively combat money laundering in Egypt, financial institutions must play a proactive role.
  • We can implement rigorous AML programs, employ best practices, and leverage technology to detect and prevent financial crimes.
  • By collaborating with law enforcement agencies and sharing intelligence, financial institutions can help curb the tide of money laundering in Egypt.

Tookitaki: Your Partner in the Fight Against Financial Crime

  • As a leading AML solutions provider, Tookitaki offers Egyptian financial institutions a powerful tool in their fight against financial crime.
  • The company’s Anti-Money Laundering Suite (AMLS) and Anti-Financial Crime (AFC) Ecosystem work cohesively to identify and prevent money laundering.
  • By leveraging advanced analytics, machine learning, and the Typology Repository, Tookitaki’s solutions help financial institutions adapt to evolving money laundering techniques and maintain an effective AML program.

Conclusion

By implementing these best practices and partnering with advanced technology providers like Tookitaki, Egyptian financial institutions can effectively combat money laundering and contribute to a more transparent and sustainable financial system for Egypt.