Egypt -- AML/CFT Compliance Regulatory Overview

Egypt has maintained a highly cautious and largely prohibitive stance on cryptocurrencies and virtual assets. While there isn't specific legislation tailored to the AML/KYC requirements for licensed Virtual Asset Service Providers (VASPs) because such licenses are generally not issued, the existing comprehensive Anti-Money Laundering and Combating Terrorist Financing (AML/CFT) framework would apply to any entity dealing with virtual assets, likely classifying them as high-risk due to the lack of specific regulation and the general prohibition.

Below are the key aspects based on Egypt's current regulatory environment:

Egypt's Stance on Cryptocurrencies and Virtual Assets

The Central Bank of Egypt (CBE) and the Egyptian Financial Regulatory Authority (FRA) have consistently warned against dealing in cryptocurrencies. The primary legal framework for the financial sector, including virtual assets, is the Banking Law.

Law No. 194 of 2020 (The Banking and Central Bank Law) explicitly addresses cryptocurrencies:

• Article 206 of Law No. 194 of 2020 prohibits the issuance or trading of cryptocurrencies, or the establishment or operation of platforms for their trading, or conducting any related activities, without a license from the Board of Directors of the Central Bank.
• Given that the CBE has not issued any such licenses, and has reiterated its warnings, this effectively means that the activities typically performed by VASPs (exchanges, custodians, etc.) are prohibited in Egypt.

This blanket prohibition means there are no specific AML/KYC requirements for licensed VASPs because such entities are not permitted to operate legally. However, if any entity were to engage in virtual asset activities, it would fall under the general AML/CFT framework and face significant legal risks.

AML/CFT Legislation in Egypt

Egypt has a robust general AML/CFT framework compliant with international standards set by the Financial Action Task Force (FATF). This framework would apply to any financial activity, including those involving virtual assets, even if unauthorized.

1. Law No. 80 of 2002 (Anti-Money Laundering Law), as amended: This is the primary AML/CFT legislation in Egypt.
2. Prime Minister's Decree No. 164 of 2020 (Executive Regulations of Law No. 80/2002): Provides detailed rules for the implementation of the AML Law.
3. Law No. 194 of 2020 (The Banking and Central Bank Law): As mentioned above, this law governs banking and financial activities and explicitly addresses virtual assets.

Customer Due Diligence (CDD) Requirements

For any financial institution (and by extension, any entity engaged in financial services, even illicitly, or a traditional FI interacting with virtual assets), the following general CDD requirements apply under Law No. 80 of 2002 and its Executive Regulations:

• Identification and Verification: Identifying the customer and verifying their identity using reliable, independent source documents, data, or information. This includes individuals, legal persons, and legal arrangements.
• Beneficial Ownership: Identifying the beneficial owner(s) of the customer and taking reasonable measures to verify their identity.
• Purpose and Nature of Business: Understanding the purpose and intended nature of the business relationship or transaction.
• Ongoing Monitoring: Conducting ongoing due diligence on the business relationship and scrutinizing transactions undertaken throughout the course of that relationship to ensure that the transactions are consistent with the financial institution's knowledge of the customer, their business, and risk profile.
• Risk-Based Approach (RBA): Applying CDD measures based on a risk assessment. Activities involving virtual assets would inherently be considered high-risk, necessitating Enhanced Due Diligence (EDD), which would include:
  • Obtaining additional information on the customer and beneficial owner.
  • Obtaining additional information on the intended nature of the business relationship.
  • Obtaining information on the source of funds or source of wealth of the customer.
  • Obtaining information on the reasons for the intended or performed transactions.
  • Obtaining the approval of senior management for establishing or continuing the business relationship.
  • Conducting enhanced ongoing monitoring of the business relationship.

Suspicious Transaction Reporting (STR)

All financial institutions (and Designated Non-Financial Businesses and Professions - DNFBP, if applicable to virtual assets) are obligated to report suspicious transactions to the Egyptian Money Laundering and Terrorist Financing Combating Unit (EMLCU/EMLCFTU).

• Obligation to Report: Any transaction, regardless of amount, where there are reasonable grounds to suspect that it involves proceeds of crime or is linked to terrorist financing, must be reported without delay.
• No Tipping-Off: Financial institutions and their employees are prohibited from disclosing to the customer or any third party that an STR has been filed or that an investigation is underway.

Record-Keeping Obligations

Financial institutions must maintain records for a specified period, typically five years, from the date of the transaction or the termination of the business relationship. These records include:

• Customer Identification Data: All documents, data, and information used for identification and verification.
• Transaction Records: All details of domestic and international transactions, including the nature, amount, currency, and parties involved.
• Business Correspondence: Records of business correspondence relating to the customer relationship.

Authority Overseeing Compliance

The primary authority responsible for overseeing AML/CFT compliance in Egypt, particularly in the financial sector, is:

• Central Bank of Egypt (CBE):

  • Website: www.cbe.org.eg
  • The CBE is responsible for licensing, regulating, and supervising banks and payment service providers, and ensures their compliance with AML/CFT regulations. As virtual assets fall under their purview according to Law No. 194 of 2020, they are the key regulator.

• Egyptian Money Laundering and Terrorist Financing Combating Unit (EMLCU/EMLCFTU):

  • The EMLCU is Egypt's Financial Intelligence Unit (FIU) and is responsible for receiving, analyzing, and disseminating STRs to relevant law enforcement authorities. While operationally independent, it often works closely with the CBE.
  • Website: Information about the EMLCU can usually be found through the Central Bank of Egypt's website or dedicated government portals. (A direct standalone URL specifically for EMLCU might not be readily available in English, but its function is well-established).

In summary, due to the prohibitive nature of virtual asset activities for non-licensed entities in Egypt, there are no specific AML/KYC requirements for licensed VASPs. However, any entity engaging in such activities, whether explicitly licensed or not, would be subject to Egypt's general and comprehensive AML/CFT framework, which demands stringent CDD, STR, and record-keeping, with the CBE acting as the primary oversight body.