Compliance Guidelines:

Regulatory Bodies in Egypt

The major regulatory bodies for AML are:

The Central Bank of Egypt (CBE)

As the monetary authority in the country, the CBE has a primary role in overseeing the banking sector. The Central Bank issues guidelines and ensures the banking sector’s compliance with AML laws, among its other regulatory functions.

The Egyptian Money Laundering and Terrorist Financing Combating Unit (EMLCU)

The EMLCU is an independent unit within the Central Bank of Egypt responsible for combating money laundering and terrorism financing. The Unit collects and analyzes data related to suspicious transactions and works in coordination with law enforcement and other relevant entities.

The Financial Regulatory Authority (FRA)

While its main mandate is to supervise non-banking financial markets and instruments, the FRA also ensures compliance with AML laws in sectors such as insurance, the stock market, and other non-banking financial entities.

Law No. 80 of 2002

Article (2) – Crimes for Which Funds Can Be Laundered

• Describes various crimes whose proceeds are subject to money laundering. This includes drug-related crimes, terrorism, illegal arms trading, theft, fraud, environmental crimes, and others. The laundering of funds from these crimes, whether they took place domestically or abroad, is prohibited.

Article (3) – Establishment of the Money Laundering Combating Unit

• Mentions the creation of a special unit within the Central Bank of Egypt dedicated to combating money laundering.

Article (4) – Responsibilities of the Unit

• The Unit is tasked with receiving reports from Financial Institutions about suspicious transactions.
• The Unit will create a database for this information, making it accessible to judicial authorities and other relevant bodies.

Article (5) – Investigation and Reporting

• This article elaborates on how the Unit handles investigations concerning the received reports and also mentions the obligation of the Unit to inform the public prosecution about potential crimes related to this law.

Article (7) – Oversight of Financial Institutions

• Entities supervising Financial Institutions are obligated to ensure these institutions comply with anti-money laundering systems and rules, including the reporting of suspicious transactions.

Article (8) – Obligations of Financial Institutions

• Financial Institutions must report suspicious transactions to the Unit.
• They must obtain and register information about the identity and legal status of their customers.
• Institutions are prohibited from opening accounts or accepting deposits of unknown or false origins.

Article (9) – Record-keeping by Financial Institutions

• Financial Institutions must keep records of financial transactions, both local and international, and maintain these records for at least five years.
• They should update these records periodically and make them available to judicial authorities upon request.

Article (10) – Protection for Reporting

• This article offers protection against criminal and civil liabilities for individuals who, in good faith, report any suspicious financial transactions.

Article (11) – Confidentiality:

• Prohibits the disclosure of any reporting, investigation, or examination procedures related to suspected money laundering transactions to any unauthorized parties.

Article (18) – International Cooperation:

• Promotes cooperation between Egyptian and foreign judicial bodies regarding money laundering crimes, including judicial assistance, extradition, and other relevant matters.

Article (19) – Requests for Seizure or Freezing of Funds

• Foreign authorities can request the seizure or freezing of funds involved in money laundering crimes, taking into consideration the rights of innocent third parties.

Article (20) – Enforcement of Foreign Judgments

• Allows the competent Egyptian judicial authorities to enforce foreign criminal judgments related to the confiscation of proceeds from money laundering.

Prime Minister Decree No. (951) Promulgating the Executive Regulations of the Anti-Money Laundering Law

Article 7: Reporting to Public Prosecution

• The Unit must report suspicions of money laundering or related crimes to the Public Prosecution when investigations yield indicative results. The chairman or his delegate exclusively conducts this reporting. It ensures that potential criminal activities are promptly communicated to the appropriate authority for further legal action.

Article 8: Self-Reporting by Perpetrators

• This article outlines the procedure when an individual involved in money laundering self-reports their activities and possibly the activities of others. Even with self-reporting, standard processes such as investigation still occur. The reporter remains liable, but there’s an implication of potential leniency depending on conditions met.

Article 9: Request for Provisional Measures

• The Unit can request the Public Prosecution to implement provisional measures regarding crimes associated with money laundering. These measures can include asset freezing, which acts as a direct sanction. Only the chairman or his delegate can make this request, ensuring centralized decision-making.

Article 6: Examinations and Investigations by the Unit

• The Unit, upon receiving a STR, will conduct thorough examinations and investigations. The process entails:
  • Review of registers and documents related to transactions.
  • Assessment of customers’ and beneficial owners’ personal data and previous transactions.
  • Requesting additional data or information when necessary.
  • These steps highlight a rigorous verification process that mirrors the principles of Enhanced Due Diligence, ensuring that the nature and details of suspicious transactions are comprehensively understood.

Article 10: Urgent Measures on Suspicious Transactions

• The chairman or his delegate has the authority to notify a reporting Financial Institution’s compliance officer about immediate measures concerning a suspicious transaction. This authority allows for rapid response in situations where the STR suggests immediate potential harm or ongoing criminal activity.

Article 14: Disclosure Forms for Travelers

• This article pertains to mandatory disclosures for travelers entering Egypt with large amounts of foreign cash, which is likely a measure to counter illicit financial flows, which could include sanctioned funds.

Article 12: Database of Suspected Transactions

• While the article doesn’t directly mention PEPs, having a database of individuals suspected of being involved in money laundering may include PEPs given their high-risk status.

Article 13: Secrecy of Database Information

• The rules regarding the confidentiality of database information, especially when shared with foreign entities, would be highly relevant in cases of PEPs, given the sensitivity around their financial transactions.

Article 11: Examination, Investigation, and Reporting

• The Unit can exercise its powers of examination, investigation, and reporting not just for financial institutions, emphasizing the depth and breadth of due diligence.

Article 15: Responsibilities of the Board of Trustees

• The Board’s roles, especially in endorsing forms, setting rules for identification, and coordination with other entities, align with EDD principles, emphasizing thorough scrutiny and verification.

Article 21: Ensuring Identity Verification Systems for Financial Institutions

• The supervisory authority collaborates with the Unit to ensure that Financial Institutions have systems in place for verifying the identities and legal statuses of their customers and beneficial owners.

Article 22: Standards for Establishing Customer and Beneficial Owner Identities

• Specifies the standards Financial Institutions should follow when identifying customers and beneficial owners. This includes verification during one-off transactions, updating identification data periodically, and verifying suspicious data or documents.

Article 31: Mandatory Reporting of Suspicious Transactions by Financial Institutions

• Financial Institutions are required to report suspicious transactions to the Unit, establishing rules and procedures for such reporting.

Article 33: Prohibition on Anonymous Accounts and Deposits

• Financial Institutions cannot open or maintain accounts or accept funds from anonymous or falsely named sources.

Article 23: Supervisory Measures and Penalties for Non-Compliance

• The supervisory authority enforces measures to ensure Financial Institutions’ compliance with the law. Violations result in penalties according to relevant laws and systems.

Article 32: Periodical Review and Update of AML Measures by Financial Institutions

• Financial Institutions must regularly review and update their anti-money laundering rules and criteria to align with national and international policies.

Article 36: Responsibilities of the Compliance Officer

• This article outlines the duty of the compliance officer to scrutinize unusual and suspected transactions and decide on the reporting procedure.

Article 37: Autonomy and Tools for the Compliance Officer

• This article underscores the responsibilities of the compliance officer, emphasizing reviewing the anti-money laundering systems and measures and proposing improvements.

Article 38: Annual Report by the Compliance Officer

• Highlights the compliance officer’s obligation to create a report on peculiar and suspected transactions and the subsequent measures the Financial Institution’s board of directors should consider.

Article 40: Record Keeping for Suspected Transactions

• Details the special files that Financial Institutions should maintain for suspected transactions.

Article 35: Appointment of a Compliance Officer

• Discusses the criteria for the appointment of a compliance officer, ensuring they possess the right qualifications and experience.

Article 36: Role in Monitoring Transactions

• Highlights the compliance officer’s duty to obtain information on unusual transactions and make informed decisions related to their reporting.

Article 39: Data Sharing with the Unit

• Describes the compliance officer’s duty to offer the required data to the Unit and ensure accessibility to essential records for examinations and investigations.

References

1. Law No. 80 for 2002
2. Prime Minister Decree No. (951) Promulgating the Executive Regulations of the Anti-Money Laundering Law