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Financial Crime Prevention in Fintech in Egypt

As technology continues to revolutionize the financial services industry in Egypt, national regulators and international organizations must adapt to set robust standards and provide relevant guidance to prevent financial crimes.

The rise of fintech has transformed the financial landscape, with innovative companies offering mobile payments, peer-to-peer lending, money transfer services, crowdfunding, and virtual currencies. However, this rapid growth also poses new risks, including:

Money laundering
Terrorist financing
Fraud
Tax evasion

Building Robust Financial Crime Controls

Egyptian authorities must ensure that fintech companies are equipped to build robust financial crime controls from the ground up, without the inefficiencies and systemic weaknesses of traditional financial institutions. Innovative fintech companies like Monzo, a UK-based digital bank, are already using machine learning to monitor customer behavior and identify illicit activity.

Regtech: The Future of Regulatory Compliance

Regtech, the application of technology to regulatory compliance, has also seen significant investment in recent years, with venture capitalists pouring money into automated regulatory compliance solutions. This trend is expected to continue, enabling fintech companies to streamline their compliance processes and reduce costs.

The European Union is taking steps to address fintech-related regulations, with the creation of its Internal Task Force on Fintech and a draft report on the topic presented by the European Parliament’s Economic and Monetary Affairs Committee. The G20 has also prioritized fintech, emphasizing its potential to improve financial inclusion for the approximately 2 billion people worldwide who remain financially excluded.

Collaboration between Public and Private Sectors

In Egypt, regulators must work closely with fintech companies and law enforcement agencies to develop an approach to financial crime that reflects and exploits the anti-financial crime opportunities offered by fintech. This requires establishing lasting mechanisms and guidance that encourage collaboration between public and private sectors.

FATF’s Role in Fintech Regulation

FATF, the global standard setter for anti-money laundering and counter-terrorist finance, must also adapt its standards to keep pace with fintech innovation. The organization’s focus on fintech is promising, with a session on fintech and RegTech planned for Silicon Valley next month.

Conclusion

Financial crime prevention in fintech in Egypt requires a collaborative approach between regulators, fintech companies, and law enforcement agencies. By setting robust standards and providing relevant guidance, Egyptian authorities can ensure that the country’s fintech sector remains innovative, efficient, and secure.