Financial Crime World

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Money Laundering and Terrorist Financing on the Rise in Egypt

A recent report by the National Risk Assessment (NRA) has revealed alarming levels of money laundering and terrorist financing activity in Egypt. The country’s banking sector is particularly vulnerable to these crimes, with electronic transfers being a favored method for moving funds.

Concentration of Proceeds of Crime

According to the NRA, the proceeds of crime are concentrated most heavily in the real estate sector, where they are used to purchase property. Terrorist financing activities are also rampant, with banks and other financial institutions being exploited to move funds raised for terrorist purposes.

New Laws and Regulations

In response to these concerns, Egypt has introduced new laws and regulations aimed at combating money laundering and terrorist financing. Law No. 80 of 2002 was amended in 2020 to include stricter penalties for those found guilty of these crimes.

  • Prime Minister Decision No. 457 of 2020 updated the executive regulation of the Anti-Money Laundering (AML) Law.
  • Law No. 15 of 2020 amending some provisions of the Anti-Terrorism Law has expanded the scope of crimes related to terrorist financing.

Supervisory Controls

The Central Bank of Egypt, Ministry of Communications and Information Technology, Financial Regulatory Authority, and other supervisory authorities have issued guidelines for AML/CFT (Anti-Money Laundering/Combating the Financing of Terrorism) controls for entities subject to their supervision.

  • These guidelines cover a range of financial sectors, including banking, securities, insurance, and consumer finance.
  • The Egyptian government has also implemented mechanisms for implementing UN Security Council Resolutions on targeted financial sanctions related to terrorism and terrorist financing.

Risk Assessment and Coordination

Egypt conducted its first ML/TF risk assessment report in 2019, which covered the period between 2014 and 2017. The assessment was based on a sample of ML and TF cases, statistics on predicate offenses, and intelligence information provided by security agencies.

  • In 2020, Egypt updated its risk assessment process to cover the period from 2018 to 2019.
  • Entities specialized in combating terrorist financing have a good understanding of the risks associated with these crimes, while other governmental institutions and supervisory authorities have a moderate to good understanding.
  • However, the police force and GAFI (General Authority for Investment and Free Zones) were found to have only a limited understanding of the risks.

Conclusion

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The recent NRA report highlights the need for continued vigilance in combating money laundering and terrorist financing in Egypt. While progress has been made in implementing new laws and regulations, more needs to be done to ensure that these crimes are effectively prevented and prosecuted.