Comprehensive Amendments to Anti-Mo
Comprehensive Amendments to Anti-Money Laundering Executive Regulations
On the 12th of June 2016, the Prime Minister issued a decree No. 1569 for the Year 2016[1] introducing a number of significant amendments to the Executive Regulations of the Anti-Money Laundering Law (the “Law”).[2] The recent amendments (the “Amendments”) complement previous changes that were introduced to the Law in May 2014, which were analyzed in the September 2014 Issue of the Egypt Legal Update. While the recent Amendments reflect the changes in the Law, they were not introduced for over two years, between May 2014 and June 2016.
Background
The amendments that were introduced to the Law in May 2014 broadened the scope of the Law and the parties that fall within its jurisdiction. While the Law’s previous language had been restricted to different forms of banks and financial institutions, the 2014 amendments added a number of other activities termed “non-financial businesses and professions”, which included real estate brokers, precious minerals and metals dealers, lawyers and accountants performing specific tasks, and casinos. Moreover, the 2014 amendments added a number of duties and obligations that must be met by all parties subject to the Law, including notification of suspected operations, maintaining specific records and documents, and ensuring confidentiality of information. Finally, the 2014 amendments gave an anti-money laundering unit the authority to notify the entity in breach of relevant obligations, to prevent it from carrying out specific functions, and to intervene at the level of the regulator to revoke the license of the party in breach.The Amended Executive Regulations
In general, the recent Amendments introduce five main changes:- The Amendments stress that lawyers and accountants are only subject to the Law when performing services related to the buying and selling of real estate, managing funds, securities and assets, managing bank accounts, organizing equity contributions in companies, establishing legal persons, and purchasing or selling commercial entities. While these were all listed in the 2014 amendments, the new Amendments to the Executive Regulations clarify the obligations that fall upon “non-financial businesses and professions”, especially the duty to install systems that ensure adherence to the Law, and the duty to appoint an anti-money laundering officer, and the duty to notify relevant authorities of suspect operations. It is to be noted that this may still cause some confusion, since it ties the jurisdiction of the Law to specific situations where lawyers and accountants perform specific tasks – rather than applying the Law generally to these professions.
This, in turn, leaves the door ajar for subjective assessment of the nature of the tasks performed, which is not in line with the serious nature of the issue and may cause uncertainty in the implementation of the Law.
- The Amendments introduce, for the first time in Egypt, a well-established concept in international legislative systems that aim to combat money laundering, namely the concept of Politically Exposed Persons (“PEP”). This includes everyone who occupied or still occupies a senior public office position, such as heads of states and governments, senior politicians, army officials, judges, executives of state-owned-corporations, senior members of political parties, and holders of high-ranking international posts. The purpose behind this definition is to place this category of public officials and politicians under stricter scrutiny than other entities falling within the jurisdiction of the Anti-Money Laundering Law.
One shortfall of the new Amendments, however, is that they do not specify a specific timeframe after which such officials cease to fall within the prescribed category, as is the case with comparative international legislation.
- The Amendments go into the detail of the mandate and tasks of the Anti-Money Laundering Unit and the mechanisms by which it will be expected to carry out its duties. The specific role of the Anti-Money Laundering Officer is also dealt with in detail.
- The Amendments also list the relevant regulatory authorities that will be in charge of overseeing each of the activities that fall under the scope of the Law. Previously, the relevant regulators were limited to the Central Bank with regards to banks and the Egyptian Financial Supervisory Authority with regards to non-banking finance activities. With the introduction of the category of “non-financial businesses and professions”, regulatory authorities now include the Ministry of Housing with respect to real estate brokers, the Ministry of Industry and Trade with respect to dealers of precious minerals, the Ministry of Tourism with respect to casinos, the Lawyers’ Syndicate with respect to lawyers, and the Syndicate of Commercial Professions for accountants. This, however, gives regulatory authorities to entities that are generally not connected to the issue of anti-money laundering. Such entities, predominantly the Lawyers’ Syndicate and the Syndicate of Commercial Professions should have been consulted before the stipulation of these new regulatory powers.
- Decreasing the amount of cash that passengers may carry on flights without notifying customs authorities from ten thousand to five thousand US Dollars. This amendment was not included in the original amendments published on the 12th of June, but was made through a retraction that was published in the Official Gazette on the 21st of June 2016,[3]i.e. 9 days after the publication of the original amendments.
Conclusion
The latest Amendments to the Executive Regulations of the Anti-Money Laundering Law complement previous amendments introduced to the Law in May 2014. The recent Amendments will aid in the implementation of the Law; they also confirm Egypt’s commitment to international anti-money laundering standards and its desire to modernize the tools available for combating money laundering and the financing of terrorism. While this is welcome, provisions related to obligations on “non-financial businesses and professions”, Politically Exposed Persons and to the role of regulatory authorities, need to be revised and further clarified. [1] Prime Minister's Decree No. 1569/2016 amending the Executive Regulations of the Anti-Money Laundering Law, Official Gazette, Issue 23 (bis) (b), 12 June 2016. [2] The Anti-Money-Laundering Law No. 80/2002, Official Gazette, Issue 20 (bis), 22 May 2002. [3] Retraction of Prime Minister's Decree No. 1569/2016, Official Gazette, Issue 24 (bis) (b), 21 June 2016.
On the 12th of June 2016, the Prime Minister issued a decree No. 1569 for the Year 2016[1] introducing a number of significant amendments to the Executive Regulations of the Anti-Money Laundering Law (the “Law”).[2] The recent amendments (the “Amendments”) complement previous changes that were introduced to the Law in May 2014, which were analyzed in the September 2014 Issue of the Egypt Legal Update. While the recent Amendments reflect the changes in the Law, they were not introduced for over two years, between May 2014 and June 2016.
Background
The amendments that were introduced to the Law in May 2014 broadened the scope of the Law and the parties that fall within its jurisdiction. While the Law’s previous language had been restricted to different forms of banks and financial institutions, the 2014 amendments added a number of other activities termed “non-financial businesses and professions”, which included real estate brokers, precious minerals and metals dealers, lawyers and accountants performing specific tasks, and casinos. Moreover, the 2014 amendments added a number of duties and obligations that must be met by all parties subject to the Law, including notification of suspected operations, maintaining specific records and documents, and ensuring confidentiality of information. Finally, the 2014 amendments gave an anti-money laundering unit the authority to notify the entity in breach of relevant obligations, to prevent it from carrying out specific functions, and to intervene at the level of the regulator to revoke the license of the party in breach.The Amended Executive Regulations
In general, the recent Amendments introduce five main changes:- The Amendments stress that lawyers and accountants are only subject to the Law when performing services related to the buying and selling of real estate, managing funds, securities and assets, managing bank accounts, organizing equity contributions in companies, establishing legal persons, and purchasing or selling commercial entities. While these were all listed in the 2014 amendments, the new Amendments to the Executive Regulations clarify the obligations that fall upon “non-financial businesses and professions”, especially the duty to install systems that ensure adherence to the Law, and the duty to appoint an anti-money laundering officer, and the duty to notify relevant authorities of suspect operations. It is to be noted that this may still cause some confusion, since it ties the jurisdiction of the Law to specific situations where lawyers and accountants perform specific tasks – rather than applying the Law generally to these professions.
This, in turn, leaves the door ajar for subjective assessment of the nature of the tasks performed, which is not in line with the serious nature of the issue and may cause uncertainty in the implementation of the Law.
- The Amendments introduce, for the first time in Egypt, a well-established concept in international legislative systems that aim to combat money laundering, namely the concept of Politically Exposed Persons (“PEP”). This includes everyone who occupied or still occupies a senior public office position, such as heads of states and governments, senior politicians, army officials, judges, executives of state-owned-corporations, senior members of political parties, and holders of high-ranking international posts. The purpose behind this definition is to place this category of public officials and politicians under stricter scrutiny than other entities falling within the jurisdiction of the Anti-Money Laundering Law.
One shortfall of the new Amendments, however, is that they do not specify a specific timeframe after which such officials cease to fall within the prescribed category, as is the case with comparative international legislation.
- The Amendments go into the detail of the mandate and tasks of the Anti-Money Laundering Unit and the mechanisms by which it will be expected to carry out its duties. The specific role of the Anti-Money Laundering Officer is also dealt with in detail.
- The Amendments also list the relevant regulatory authorities that will be in charge of overseeing each of the activities that fall under the scope of the Law. Previously, the relevant regulators were limited to the Central Bank with regards to banks and the Egyptian Financial Supervisory Authority with regards to non-banking finance activities. With the introduction of the category of “non-financial businesses and professions”, regulatory authorities now include the Ministry of Housing with respect to real estate brokers, the Ministry of Industry and Trade with respect to dealers of precious minerals, the Ministry of Tourism with respect to casinos, the Lawyers’ Syndicate with respect to lawyers, and the Syndicate of Commercial Professions for accountants. This, however, gives regulatory authorities to entities that are generally not connected to the issue of anti-money laundering. Such entities, predominantly the Lawyers’ Syndicate and the Syndicate of Commercial Professions should have been consulted before the stipulation of these new regulatory powers.
- Decreasing the amount of cash that passengers may carry on flights without notifying customs authorities from ten thousand to five thousand US Dollars. This amendment was not included in the original amendments published on the 12th of June, but was made through a retraction that was published in the Official Gazette on the 21st of June 2016,[3]i.e. 9 days after the publication of the original amendments.