Egypt – Know Your Customer (KYC) Rules

 

 

Egypt is not considered a regional financial center or a major hub for money laundering. Egypt has a large informal cash economy, and many financial transactions are undocumented or do not enter the banking system. Cash remains by far the preferred means of payment in Egypt and, despite efforts by the Egyptian authorities, the use of the formal financial sector remains underdeveloped. Reportedly, arms are smuggled across Egypt‘s border with Gaza; the funding source and the destination of the proceeds are not clear. Authorities report trade-based money laundering is common, reportedly to avoid taxes and customs fees. Tax evasion also is common. Customs fraud and invoice manipulation also are found in regional value transfer schemes. Since the Egyptian revolution, the attention of Egypt‘s money laundering investigating agencies has been focused almost exclusively on investigating allegations of illicit gains or corruption under the Mubarak regime. The European Union has taken action to freeze the assets of Mubarak and several members of his regime based on their apparent misappropriation from the Egyptian state.

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KNOW-YOUR-CUSTOMER (KYC) RULES:

 

Enhanced due diligence procedures for PEPs:

 

PEP is an abbreviation for Politically Exposed Person, a term that describes a person who has been entrusted with a prominent public function, or an individual who is closely related to such a person. The terms PEP, Politically Exposed Person and Senior Foreign Political Figure are often used interchangeably

    • Foreign PEP: YES
    • Domestic PEP: YES

Egypt – KYC covered entities

 

The following is a list of Know Your Customer entities covered by Egyptian Law:

    • Banks
    • Foreign exchange companies
    • Money transfer companies
    • the post office
    • Insurance companies
    • Security firms
    • Leasing companies
    • Factoring companies
    • Mortgage financing companies

Egypt – Suspicious Transaction Reporting (STR) Requirements:

 

Number of STRs received and time frame: 2,253 from June 2008 – June 2011

Number of CTRs received and time frame: Not applicable

The following is a list of STR covered entities covered by Egyptian Law:

    • Banks
    • Foreign exchange companies
    • Money transfer companies
    • the post office
    • Insurance companies
    • Security firms
    • Leasing companies
    • Factoring companies
    • Mortgage financing companies

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

 

Prosecutions: One in 2011
Convictions: Seven from January 2008 – June 2011

 

ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS:

The Government of Egypt (GOE) has been hesitant to utilize its money laundering statutes to their full legal extent. Overlapping jurisdiction and poorly defined areas of responsibility have hindered money laundering investigations in Egypt. Egypt‘s FIU also suffers from a lack of resources and analysts that is likely slowing enforcement efforts. The GOE should work to improve interagency coordination and information-sharing in investigations of suspicious transactions and financial activities. Egypt would benefit from increased funding and a greater number of investigators and prosecutors dedicated to pursuing money laundering crimes.

Specifically, Egypt should work to increase the number of successful money laundering investigations and prosecutions and improve its enforcement of cross-border currency controls, including by providing training on coordinating and conducting complex financial investigations and by enhancing coordination with regional and MENAFATF partners. The GOE should also work to more effectively manage its asset forfeiture regime, including the identification, seizure and forfeiture of assets.