The Central Bank of Egypt (CBE) has issued new regulations to combat money laundering and terrorism financing, in line with international standards. The regulations specify the cases of suspicion that banks should monitor and report. Banks have six months to comply with the new rules.
The CBE said that the new regulations aim to adopt best international practices in this field and to reinforce the existing measures. The regulations apply to all banks operating in Egypt and their branches abroad, as well as foreign banks operating in Egypt. Banks must ensure that their foreign branches and subsidiaries follow the same or stricter measures than those required by Egypt unless they conflict with local laws or instructions.
Banks must ensure that their foreign branches and majority-owned subsidiaries adhere to anti-money laundering and terrorism financing measures, consistent with Egypt’s requirements, even if these measures are more stringent than those applied in the host country, without conflicting with local legislation or regulatory instructions.
According to the CBE, some of the indicators of suspicious operations include:
- Large or frequent cash deposits or withdrawals that are not consistent with the customer’s profile or activity.
- Cash deposits by different individuals or entities into a customer’s account without a clear purpose or relationship.
- Cash deposits in multiple branches of the same bank within a short period, followed by cash withdrawals or transfers to other accounts without justification.
- Large cash withdrawals in credit accounts that result in a significant credit balance without justification.
- Significant cash purchases and sales of foreign currencies without a clear need for foreign exchange transactions.
- Exchanging large amounts of banknotes from small to large denominations without justification.
External Transfers
The CBE issued new regulations to detect and prevent money laundering and terrorism financing through external transfers. The regulations specify the indicators of suspicious transfers that banks should monitor and report. These indicators include:
- Transfers of large or frequent amounts, especially with cash payment instructions, that are not consistent with the customer’s profile or activity.
- Transfers that are repeated or do not match the customer’s activity within a certain period, and transfers to or from different parties, especially foreigners, without a clear purpose or relationship.
- Transfers of equal or similar amounts to or from multiple parties or a single party across multiple accounts without justification.
- Transfers of large or frequent amounts to or from parties in high-risk regions near border crossings or known for specific crimes, according to the country’s risk assessment results.
- Transfers to or from parties in high-risk countries with official data issued by the Financial Action Task Force (FATF) or any other countries officially communicated to the bank.
- Transfers that use the customer’s account as an intermediary between other parties or accounts, especially overseas, without a clear relationship with the customer.
- Transfers of large amounts from major customers to customers in needy villages without clear relationships or purposes.
- Transfers of large or small and frequent amounts from foreign electronic payment companies or companies known for dealing in virtual currencies.
Trade Financing Operations
The CBE also issued new regulations to detect and prevent money laundering and terrorism financing through trade financing operations. The regulations specify the indicators of suspicious operations that banks should monitor and report. These indicators include:
- Shipping goods to or from high-risk countries with official data issued by the FATF or any other countries officially communicated to the bank.
- Discrepancies in the description or value of goods in the letter of credit application or related documents without acceptable justifications supported by documents.
- Significant increases or decreases in the value of goods or merchandise in the invoice compared to their true value.
- Presenting documents related to trade financing operations that do not match the information available about the customer and their activity, such as using informal simplified models that suggest the import or export process is fictitious.
- Presenting documents related to trade financing operations that are suspected of being forged or containing inaccurate or misleading information, or that appear to have been submitted and rejected previously.
- Importing or exporting goods that do not match the nature and scale of the customer’s activity, or importing or exporting goods that do not belong to the customer without a clear justification.
- Increasing the activity of import and export operations for a company that does not match the seasonal nature of the company’s business or trade.
- Opening multiple documentary credits, issuing guarantees that do not match the customer’s activity, or extending or modifying the terms of documentary credits more than once without clear justification.
- Including complex or unusual payment terms in documentary credits or collection documents, or paying to parties unrelated to the import process, without a clear reason.
- Requesting the amendment of the beneficiary’s name from the documentary credit or collection documents before payment without a clear justification.
- Opening documentary credits or issuing guarantees against financial guarantees that do not match the customer’s activity and previous dealings with the bank.
- Making payments in circular stages where the funds return to the originating company through import and export operations that appear to be fictitious.
- Requesting the discounting of guarantees shortly after their issuance by the bank without a clear justification, or showing a lack of concern about the cost of trade financing operations in terms of commissions or expenses.
Suspicion in Credit Operations
The CBE issued new regulations to detect and prevent money laundering and terrorism financing through credit operations. The regulations specify the indicators of suspicious operations that banks should monitor and report. These indicators include:
- Seeking loans with collateral from assets owned by others or providing additional guarantees in their names, without a clear connection to the customer or without the assets’ size matching the customer’s financial situation.
- Obtaining credit facilities against guarantees from a foreign bank without clear justification, requesting expedited transfer of the loan amount to other banks without a clear purpose, or unexpected early repayment of debts by the customer or other parties, especially for delinquent customers.
Electronic Payment Tools
The CBE has also issued new regulations to detect and prevent money laundering and terrorism financing through electronic payment tools. The regulations specify the indicators of potential misuse of these tools that banks should monitor and report. These indicators include:
- Using their electronic payment tool to make or receive repeated transfers to or from different parties without a clear relationship with the customer and clear justification.
- Using electronic payment tools excessively or inconsistently with the customer’s previous transaction patterns or available information.
- Using electronic payment tools frequently in geographically distant areas from the customer’s residence or in high-risk countries.
- Using electronic payment tools repeatedly for purchases or cash withdrawals in areas known for specific crimes or inconsistent with customer information.
Account Transaction Patterns
The CBE also issued new regulations to detect and prevent money laundering and terrorism financing through account transaction patterns. The regulations specify the indicators of suspicious transactions that banks should monitor and report. These indicators include:
- Large and unjustified transactions on accounts of medical professionals, medical facilities, hospitals, and nurses that do not match the nature of the actual activity or years of experience, suggesting potential involvement in organ trafficking crimes.
- Multiple transactions from a customer’s account to accounts within the same bank or to other banks, where the funds return to the originating account.
- Issuing checks for large amounts disproportionate to the customer’s information and lacking a clear relationship between the beneficiary and the drawer, or converging credit and debit movements on the same account over short periods without clear justification.
Bank Safes
The CBE also issued new regulations to detect and prevent money laundering and terrorism financing through the use of bank safes. The regulations specify the indicators of suspicious use of bank safes that banks should monitor and report. These indicators include:
- Making unusually frequent or extended visits to the customer’s safe, or renting multiple safes.
- Retaining safes in the bank’s region without a clear reason, especially for non-resident customers or if the service is available in their residence region.
- Showing discomfort during safe visits, refusing to sign the visit log, authorizing others with unclear connections to use their safe, or using the safe continuously by an agent without the customer’s presence, all without clear justification.
Customer Behaviors Raising Suspicions
The CBE also issued new regulations to detect and prevent money laundering and terrorism financing through customer behaviors. The regulations specify the indicators of suspicious behaviors that banks should monitor and report. These indicators include:
- Withholding sufficient information or providing inaccurate information, whether personal or related to their activities or financial transactions.
- Providing forged documents.
- Showing abnormal interest in inquiring about the systems or criteria for detecting or reporting unusual or suspicious operations.
- Avoiding direct contact with the bank continuously.
- Changing the standard of living of a bank employee suddenly and without explanation.
Countering Terrorist Financing
The CBE also issued new regulations to detect and prevent terrorism financing through various indicators. The regulations specify the indicators of suspicious operations that banks should monitor and report. These indicators include:
- Transactions to or from parties in regions or countries with security instability or terrorist activity.
- Operations on an account not designed for profit, inconsistent with the purpose and activity of the entity.
- Transactions involving local or foreign charities issuing or receiving remittances from high-risk countries.
- Transfers between customer accounts and charity accounts without clear justification or disproportionate to any of the customers or charities.
