Financial Crime World

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Risks Galore: Egyptian Financial Sector Faces Multiple Threats

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The Egyptian financial sector is facing a plethora of risks, including money laundering, terrorist financing, and exploitation by criminal and organized crime groups. According to recent reports, the banking sector is the most vulnerable to these threats, followed closely by entities engaged in the securities market.

Legislative and Regulatory Developments

To combat these risks, Egypt has made significant legislative and regulatory developments in recent years. The AML Law No. (80) of 2002 was amended by Law No. (17) of 2020, which introduced stricter regulations on anti-money laundering measures. Similarly, Prime Minister Decision No. (457) of 2020 amended some provisions of the executive regulation of the AML Law.

  • The law requires a definition for funds and anti-money laundering measures in the Arab Republic of Egypt.
  • Egypt has also issued laws to combat terrorist financing, including Law No. (15) of 2020 amending some provisions of Anti-Terrorism Law No. 94 of 2015.

Supervisory Controls

Supervisors have issued AML/CFT controls to entities subject to their supervision, including banks, exchange companies, and entities engaged in non-banking financial activities. The Egyptian Financial Supervisory Authority (EFSA) has also regulated rules governing the incoming and outgoing cross-border movement of currency and bearer negotiable instruments.

Assessment of Risks

In 2019, Egypt adopted its first ML/TF risk assessment report, which covered the period between 2014 and 2017. The assessment was based on a sample of ML and TF cases, statistics on predicate offenses, intelligence information provided by security agencies, and results of an overall analysis prepared by the Egyptian Money Laundering and Terrorist Financing Combat Unit (EMLCU).

  • The report highlighted several risks, including:
    • The use of cash to finance terrorism through donations from the public and support provided by legitimate sources of income for businessmen who belong to or are loyal to terrorist groups.
    • The concentration of proceeds of crime in the real estate sector, with criminals using cash to purchase properties.

Coordination and Policy Setting

Egypt has made significant progress in assessing risks, coordinating efforts, and setting policies to combat money laundering and terrorist financing. The EMLCU was established under Law No. 80 of 2002 and is responsible for combating money laundering and terrorist financing.

  • However, there are still areas that require attention, including:
    • Better coordination between government agencies and private sector entities.
    • Increasing public awareness about the risks of money laundering and terrorist financing.

In conclusion, the Egyptian financial sector faces multiple threats from money laundering, terrorist financing, and exploitation by criminal and organized crime groups. While significant progress has been made in assessing risks, coordinating efforts, and setting policies to combat these threats, there is still much work to be done to ensure the stability and integrity of the financial system.