Amendments to the Executive Regulat

On 27 November 2019, the Prime Minister issued a decision amending the executive regulations (the “ER”) of the Anti-Money Laundering Law No. 80 of 2002 (the “AML Law”).[1] The amendment mainly updates reference in the Law to the implementation of UN Security Council Resolutions on combating the financing of terrorism and proliferation of weapons of mass destruction. It also modifies the Egyptian Prosecution’s role in requesting the removal of names of terrorist persons and groups from sanction lists in relation to Security Council Resolutions and shortens the timeframe for the Egyptian authorities’ response to designations on said lists.

Background

The AML Law witnessed amendments to its provisions and those of its executive regulations in 2014 and 2016 respectively. These amendments broadened the scope of the Law and the parties that fall within its jurisdiction so that it was no longer restricted to banks and financial institutions. The 2014 amendments added other activities to the scope of the AML Law, which were termed “non-financial businesses and professions”. These included real-estate brokers, precious minerals and metals dealers, lawyers and accountants performing specific tasks, and casinos. Egypt’s application of anti-money laundering standards has been under scrutiny in light of a review by the Middle East and North Africa Financial Action Task Force (MENA-FATF),^[2] to assess the effectiveness of the country’s regimes for combating money laundering and the financing of terrorism in compliance with FATF’s recommendations.^[3] In addition, a recent European Bank for Reconstruction and Development annual Transition Report suggested that Egypt has seen an increase in the risk of inadequate compliance with anti-money laundering and countering the financing of terrorism frameworks.^[4] However, it is also worth noting that the Basel AML Index 2019^[5] listed an improvement in the risk score of Egypt that was mainly attributed to the country being dropped from the US Department of State’s list of major money laundering countries.^[6]

Prime Minister Decision 2910 of 2019 Amending the AML Law ER[7]

The new decision amends Articles (50) to (56) under Chapter VII: International Cooperation in the Combating of Money Laundering of the AML Law ER. The Articles relate to the mandate of the Egyptian Money Laundering and Terrorist Financing Combating Unit (MLCU) in implementing Egypt’s obligations under all international and bilateral treaties that the country is party to on the subject of terrorism financing and the proliferation of weapons of mass destruction. Prior to amendment Article (50) provided that this implementation shall include UN Security Council (“SC”) resolutions on the matter, without limitation. The amended provision now specifically references SC Resolution No. 1373 of 2001 on Threats to international peace and security caused by terrorist acts,[8] instead of the former general wording. On the other hand, the amendment to following Article (51) removes specific reference to SC Resolution No. 1267 of 1999 imposing limited air embargo and financial embargo on the Taliban,[9] and Resolutions No. 1988 of 2011[10] and No. 1989 of 2011[11] on Threats to international peace and security caused by terrorist acts (concerning the Taliban & Al Qaeda respectively). Instead of this specific reference to SC Resolutions, amended Article (51) now provides a procedure for responding to general requests for the designation (listing) of terrorist persons or entities whose acts are not directed against Egypt. Any said requests are to be presented to the Egyptian Public Prosecutor through the Ministry of Foreign Affairs along with supporting investigations. The relevant criminal circuit then reviews the request and must now respond within 7 days from the date of the request. Periodic review of designations on terrorism lists will now be made every five years instead of three previously. The amendment of Article (52) provides that the assets of a terrorist person or entity will be subject to automatic freezing as soon as the decision to list is published resulting in an immediate ban on any direct or indirect provision of financing to – or otherwise any gathering of money or assets on behalf of – said person or entity. Article (53) deals with the procedures for the removal of a name from the terrorist lists, an appeal of the decision to designate, or an amendment to the scope of frozen assets. Paragraph 7 of this Article was removed. It provided for the mechanism of removal of a designation from sanction lists, appeal of said designation, or an amendment of scope, in relation to the implementation of UN SC Resolutions. The mechanism included that the Egyptian prosecution office could make a request to the Ministry of Foreign Affairs to remove said person or entity’s name, or make exceptions for certain assets, which request the Ministry would then send to the SC for assessment. Finally, the decision adds two new definitions to the AML Law ER. The first is a definition of the ‘bodies that conduct the freezing [of assets]’. These are defined to include supervisory bodies, financial institutions, professionals and those undertaking non-banking financial activities, including the commercial registry, the companies’ registry, the General Authority for Investment and Free Zones, the notary public, the customs authority, the traffic department at the Ministry of Interior, and any others who might be in possession of money, assets, or economic resources in relation of listed persons/entities. A definition of the term ‘without delay’ that was added to the provision of Article (52) mandating an immediate ban – without delay – on any direct or indirect financing is stated to mean ‘immediately within hours from the issuance of the decision to designate on a terrorist list from a relevant authority’. The decision containing these amendments came into effect on 28 November 2019.    [1] Law No. 80/2002 on Anti-Money Laundering, Official Gazette, Issue No. 20 (bis), 22 May 2002. [2] MENAFATF, “Overview”, available through this link. [3] FATF. (2019). International Standards on Combatting Money Laundering and the Financing of Terrorism & Proliferation: The FATF Recommendations. Available through this link. ^[4] European Bank for Reconstruction and Development. Transition Report 2018-2019: Work in Transition. Available through this link ^[5] Basel Institute on Governance. (2019). Basel AML Index 2019: A country ranking and review of money laundering and terrorist financing risks around the world. Available through this link. ^[6] “The US Department of State published its 33rd annual report (INCSR for 2018) in March 2019 listing 81 Countries which are considered “Major Money Laundering Jurisdictions,” down from 91 just a year before. Countries no longer designated are: Cambodia, Egypt, Guinea-Bissau, Kyrgyz Republic, Lebanon, Portugal, S Africa, Switzerland, Turkmenistan & Uruguay”. Available through this link. [7] Prime Ministerial Decree No. 2910/2019 amending certain provisions of the Executive Regulations of the Anti-Money Laundering Law No. 80/2002 issued by virtue of Prime Ministerial Decree No. 951/2003, Official Gazette Issue 47 (bis) (d), 27 November 2019. [8] United Nations Security Council Resolution No. 1373 (2001) on Threats to international peace and security caused by terrorist acts, available through this link. [9] United Nations Security Council Resolution No.1267 (1999) imposing limited air embargo and financial embargo on the Taliban, available through this link. [10] United Nations Security Council Resolution No.1988 (2011) on Threats to international peace and security caused by terrorist acts, available through this link. [11] United Nations Security Council Resolution No.1989 (2011) on Threats to international peace and security caused by terrorist acts, available through this link.