Egypt

Last updated: 12/01/2016


CENTRAL AUTHORITY FOR REPORTING

Money Laundering Combating Unit (MLCU)

According to Anti-money Laundering Law No. 80 of 2002, as amended, and its Executive Regulations issued pursuant to the Egyptian Prime Minister's Decree No. 951 of 2003as amended, MLCU is an independent unit functioning within the Central Bank of Egypt (CBE).

MLCU receives all reports concerning money laundering activities and crimes and reports any investigation results to the Public Prosecution. All received reports and gathered information concerning money laundering and terrorism financing activities are recorded in its database. MLCU sets the regulations and guarantees secrecy. MLCU exchanges information related to its activities with others, such as supervisory and competent authorities inside and outside Egypt, and sets the regulations required to verify the legal status of customers and beneficiaries, be they natural or juridical persons, through legal identification documents.  


OTHER ANTI-MONEY LAUNDERING REGULATOR(S)

There are two types of anti-money laundering regulators: supervisory authorities and public control entities.

Supervisory authorities

·         Central Bank of Egypt (CBE)

CBEsupervises banks operating inside the Arab Republic of Egypt (ARE) and their branches abroad, foreign exchange entities and the entities licensed to deal in foreign currency and money transfers.

·         Egyptian Financial Supervisory Authority (EFSA)

The EFSA supervises and regulates all non-banking financial markets and instruments. This includes all activities related to Insurance Services, Mortgage Finance, Financial Leasing, Factoring and Securitization. The EFSA was established by virtue of the provisions of Law No.10 of 2009.

The EFSA is replaced where authority is given to the Egyptian Insurance Supervisory Authority, the Capital Market Authority and the Real Estate Finance Authority (pursuant to the Supervision and Regulation of Insurance law no. 10 of 1981, the Capital Market law no. 95 of 1992, the Depository and Central registry law no. 93 of 2000, the Mortgage Finance law no. 148 of 2001, as well as other related laws and decrees that are part of the mandates of the above authorities.)

·         Ministry of Communications and Information Technology (MCIT)

MCIT supervises the postal saving funds.

         General Authority for Investment and Free Zones (GAFI)

GAFI supervises entities practicing lease finance activities and factoring activities.

The Prime Minister may issue a decree specifying a Supervisory Authority. For example, the Prime Minister issued Decree No. 2676 for the year 2008 authorizing the Ministry of Trade and Industry (MTI) to be a Supervisory Authority, supervising the entities performing transactions regarding valuablemetals and precious stones, as well as real estate brokerage activities.

 

Public Control Entities[1]

·         General Department of Public Funds Crimes Investigation Police (GDPF). GDPF is affiliated to the Ministry of Interior and was established by virtue of the Presidential Decree No. 10 of 1984 and organized by the Decree of the Minister of Interior No. 167 of 1985 organizing the General Department of Public Funds Crimes Investigations Unit.

·         Public Prosecutor, organized by the Criminal Procedural Law No. 150 of 1950 as amended.

·         Administrative Control Authority (ACA), organized by Law No. 54 of 1964 as amended.

·         National Security Agency (NSA),organized by Law No. 323 of 1955 as amended.

·         Customs Authority (CA), affiliated to the Ministry of Finance and organized by Customs Law No. 66 of 1963 as amended.



[1]We would like to note that such public control authorities/entities are by-law competent with the processing and carrying out the procedures in relation to the crimes indicated in the relevant laws and decrees and are not directly involved in a supervisory role with respect to Anti Money Laundering activities given that the competent authority is primarily the MLCU.


ARE LAWYERS COVERED BY ANTI-MONEY LAUNDERING LEGISLATION?

Lawyers are covered by the Egyptian Anti-money Laundering Legislation similarly to natural or juridical persons. Lawyers may not rely on client / attorney privilege as regards any suspected transaction that falls under Anti-money Laundering Law discovered during the performance by the lawyer of his/her duties.


LIST THE LAWS REGARDING ANTI-MONEY LAUNDERING INDICATING WHICH LAWS ARE APPLICABLE TO LAWYERS.

Lawyers are not subject to the Egyptian AML/CTF regulations.

 

The laws regarding anti-money laundering are:

  1. Anti-Money Laundering Law No. 80 of 2002 and as amended.
  2. Prime Minister's Decree No. 951 of 2003, issuing the Executive Regulation of the Anti-Money Lawas amended.
  3. Presidential Decree No. 164 of 2002 organizing MLCU.
  4. Presidential Decree No. 28 of 2003 organizing the functions and officials at the Money Laundering Combating Unit.
  5. Prime Minister's Decree No. 2676 of 2008, adding other entities to the list of financial entities listed in the Anti-money Laundering Law.
  6. The Central Bank, Banking System and Currency Law No. 88 of 2003as amended
  7. Presidential Decree No. 101 of 2004 issuing the Executive Regulation of Law No. 88 of 2003.
  8. Presidential Decree No. 64 of 2004 issuing the statutes of CBE.
  9. Law No. 146 of 1988 regarding Companies Receiving Money for Investment thereof.
  10. Presidential Decree No. 520 for the year 1979, establishing the CMA.
  11. Capital Market Law No. 95 for the year 1992 and as amended
  12. The Minister of Foreign Trade’s Decree No. 906 for the year 2001 issuing the Executive Regulations of the Capital Market Law as amended.
  13. The Minister of Investment’s Decree No. 243 for the year 2006 regarding Egyptian Accounting Standards.
  14. The Minster of Investment’s Decree No. 166 for the year 2008 regarding the Egyptian Specific Auditing Standards.
  15. Law No. 362 for the year 1996 regarding the Supervision and Control of Insurance as amended
  16. The Minister of Economy and International Cooperation’s Decree, issuing the Executive Regulations of the Supervision and Control of Insurance as amended.
  17. Law No.10 for the year 2009 organizing control over Non-Banking Markets Financial Instruments.
  18.  Presidential Decree No. 294 for the year 2003 approving the United Nations Convention against Transnational Organized Crime.
  19. Presidential Decree No. 307 for the year 2004 providing for the accession by Egypt to the United Nations Convention against Corruption.
  20. Presidential Decree issuing law No. 36 of 2014

ARE VISITING LAWYERS SUBJECT TO LOCAL LAWS REGARDING ANTI-MONEY LAUNDERING, AND, IF SO, TO WHAT EXTENT?

Recently the Anti-Money Laundering Law No. 80 of 2002 has been amended to add a  list of “Non-Financial Professionals” which are obliged to comply with the requirements of the Anti-Money Laundering law. Lawyers are among those “Non-Financial Professionals”. Given that the recent amendment is generally applicable to all lawyers, visiting lawyers conducting business inside Egypt may be required to comply with the Anti-Money Laundering Law.

It is worth noting that the extent of compliance by lawyers to the Anti-Money Laundering law is with respect to legal services rendered in connection with the following activities:

a.     Buying and selling real estate;

b.    Managing funds or securities, or any other assets;

c.     Managing bank accounts, saving accounts, or securities accounts;

d.    Organizing contributions for the purpose of establishing, operating or managing companies; and

e.     Establishing, operating or managing legal persons, or legal arrangements, and buying or selling commercial entities.

Moreover lawyers are required to keep records of the financial transactions carried out in connection with the above mentioned activities. Lawyers are also required to report suspicious activities and comply with the instructions of the MLCU.


LIST ANY MONEY LAUNDERING GUIDANCE FOR LAWYERS (FOR EXAMPLE, LAW SOCIETY OR BAR ASSOCIATION GUIDELINES) CURRENTLY IN PLACE.

There are no specific guidelines for lawyers on the Egyptian legislation regarding Anti-money Laundering except for the provisions related to the client / attorney privilege as described above.  


IS THE LAW SOCIETY/BAR ASSOCIATION INVOLVED IN SUPERVISING OR ENFORCING COMPLIANCE WITH ANTI-MONEY LAUNDERING REGULATIONS?

In accordance with the recent amendment to the Anti-Money Laundering law, the regulatory entities for lawyers are required to make available the necessary means to enable lawyers to comply with the provisions of the law. In this respect, the Egyptian Bar Association in its capacity as the body supervising lawyers should make available such means. 


DESCRIBE CLIENT DUE DILIGENCE REQUIREMENTS, INCLUDING WHEN IT MUST BE UNDERTAKEN BY LAWYERS.

Other than the requirement to retain records of certain transactions as explained above, there are no due diligence requirements per se to be undertaken by lawyers. 


DOES YOUR COUNTRY FOLLOW A RISK-BASED APPROACH TO CLIENT DUE DILIGENCE BY LAWYERS?

Not applicable.


ARE THERE ENHANCED DUE DILIGENCE MEASURES FOR CERTAIN TYPES OF CLIENTS, FOR EXAMPLE, POLITICALLY EXPOSED PERSONS?

As explained above, retaining records of transactions in relation to certain activities is required.


ARE THERE SIMPLIFIED DUE DILIGENCE MEASURES FOR CERTAIN TYPES OF CLIENTS, FOR EXAMPLE, LISTED COMPANIES?

Not applicable. 


ARE LAWYERS PERMITTED TO RELY ON THIRD PARTY DUE DILIGENCE? IF YES, PLEASE DESCRIBE.

Not applicable.

Other than the requirement to retain records of certain transactions as explained above, there are no due diligence requirements per se to be undertaken by lawyers.


WHEN IS A LAWYER UNDER AN OBLIGATION TO REPORT SUSPICIOUS TRANSACTIONS?

Pursuant to Article 8 of the AML Amended Law,Non-Financial Professionals shall report any suspicious transactions constituting proceeds or involving money laundering or terrorism financing, as well as the attempts to conduct such transactions to the MLCU, as soon as possible, regardless of their value and provided that such suspicious transactions are within the scope of activities stipulated in the law. Non-Financial Professionals shall comply with the instructions and regulations of the MLCU. Accordingly, Non-Financial Professionals shall maintain a proper system and procedures in compliance with such MLCU instructions and regulations.


DOES ATTORNEY/CLIENT PRIVILEGE AND/OR DUTIES OF CONFIDENTIALITY PROVIDE A DEFENCE OR PARTIAL/TOTAL EXCEPTION TO THE REQUIREMENT TO REPORT SUSPICIOUS TRANSACTIONS?

No, Non-Financial Professionals shall report  transactions thought to be in violation to the Anti Money Laundering law. Moreover, the  Anti Money Laundering law expressly exempts persons reporting suspicious transactions in good faith from criminal and civil liability. 


DOES LOCAL LAW PROVIDE ANY CRIMINAL AND/OR CIVIL INDEMNITY TO A LAWYER WHO HAS REPORTED A SUSPICIOUS TRANSACTION?

The  Anti Money Laundering law expressly exempts persons reporting suspicious transactions in good faith from criminal and civil liability. Therefore, a lawyer acting in bad faith may be subject to liability.


ONCE A SUSPICIOUS TRANSACTION REPORT HAS BEEN FILED, IS A LAWYER ALLOWED TO PROCEED WITH THE LEGAL ADVICE/TRANSACTION, AND, IF SO, MUST CONSENT FROM AUTHORITIES BE OBTAINED FIRST?

The Anti Money Laundering Law does not expressly state if this is possible. However, as explained below, the law prohibits Financial Institutions or Non-Financial Professionals from disclosing to clients that they are being investigated or that these institutions or professionals have reported suspicious activities. Thus, it could be interpreted a contrario that a lawyer may proceed with the transaction.


IS THERE A TIPPING-OFF PROHIBITION? IF YES, PLEASE DESCRIBE.

Yes, according to Article 11 of Anti-Money Laundering Law, it is prohibited to disclose to a client, beneficiary or any person other than the MLCU and other AML enforcement entities, any information regarding reporting, investigating or examination procedures taking place in connection with suspicious transactions.


DESCRIBE ANY RESTRICTIONS ON ACCEPTING A NEW CLIENT.

TThere are no provisions in the AML Amended Law in relation to this issue.


ARE THERE ONGOING MONITORING REQUIREMENTS FOR EXISTING CLIENTS? IF YES, PLEASE DESCRIBE.

As indicated in our response above, subject to Article 9 of the AML Amended Law, Non-Financial Professionals shall maintain updated records and documents for domestic or international financial transactions carried out by them. Such records and documents shall contain sufficient data for identifying such transactions. Non-Financial Professionals shall also maintain such records and documents concerning clients and real beneficiaries whether natural and judicial persons, for a period not less than five years from the date of transaction completion, or from the date of closing the account of such client or real beneficiary, as the case may be, unless the MLCU or the investigation authorities request them to maintain such records and documents further to such period.


DESCRIBE ANY OTHER WAYS IN WHICH LAWYERS ARE AFFECTED BY ANTI-MONEY LAUNDERING LEGISLATION.

Given that such amendments have been issued relatively recently, and that such amendments have not yet been reflected in the executive regulations of the Anti Money Laundering law how these amendments affect lawyers is not clear yet.


HAVE LAWYERS IN YOUR JURISDICTION BEEN IMPLICATED IN MONEY LAUNDERING, INCLUDING ANY TYPE OF COMPLAINT, ARREST OR PROSECUTION?

There have been certain cases where lawyers have been arrested or convicted for corrupt or money laundering practices


HAS THE FINANCIAL ACTION TASK FORCE (FATF) CONDUCTED A MUTUAL EVALUATION OF THIS COUNTRY, AND, IF SO, WHAT WERE THE FINDINGS CONCERNING LAWYERS’ COMPLIANCE WITH THE FATF 40+9 RECOMMENDATIONS?

Egypt is a founding member of MENAFATF (an FATF associate body for the Middle East and North Africa). A Mutual Evaluation Report was published in May 2009.

The Report found that lawyers are not subject to AML/CTF regulations. It recommended that ‘lawyers and accountants should be brought under coverage of the AML/CFT Law’, or Egypt should ‘develop safeguards so that their continued exclusion does not impair the effectiveness of the AML /CFT regime’. This recommendation has been adopted by virtue of the recent amendments to the Anti-Money Laundering law. 


Information provided by:

Youssef Nassef

 y.nassef@kamelaw.com

Al Kamel Law