Egypt Regulation: KYC compliance

user Youssry Saleh & Partners calender 10 Nov 2020 views 2477 Views

Know your Customer (KYC) is a principle that states that “Every bank or broker-dealer shall use reasonable diligence, in regard to the opening and maintenance of every account, to know (and retain) the essential facts concerning every customer and concerning the authority of each person acting on behalf of such customer.”[1] This principle is used to avoid fraud and ambiguity.

Egyptian Minister of Supply and Internal Trade Decree No. 906 of 2001 mentioned Know Your Customer as one of the obligations that the custodian is obligated to complete the registration of all personal data of the customer with whom he signed securities account management contract, on the database of the securities accounts management system, in particular: National ID or customer ID number and date of issue – insurance number – date of birth. The type of customer (male – female) – nationality – religion – legal form – address – telephone and fax numbers, and other means by which he identifies his client according to the “know your customer” principle.

In addition to Decree No. 120 of the year 2019 regarding the controls in the field of combating money laundering and terrorist financing of entities working in the field of non-bank financial activities. Article 13 states the controls in the field of combating money laundering and terrorist financing of entities operating in the field of non-bank financial activities. Refusing to fill the know your client application is considered one of the suspicious actions according to the law.

Egyptian Anti-Terrorism Law No. 94 of the year 2015 of the year defining the Fund and Assets in Article No. 1 as all physical and virtual assets, that their proceeds and economic resources, including oil and other natural resources or property of any kind, whether physical or moral, transferred or fixed, including national or foreign currency, securities or trade, instruments and proven of any kind of the above-mentioned, whatever form they produce; Including digital or electronic form, bank credit, bank checks and documentary credits, any interest, profits or sources of income derived from or generated by such funds or assets, or any other assets that have been prepared for use in obtaining financing, products or services and all rights relating to any such assets. It also includes virtual assets with a numeric value that can be traded, transferred or converted to a digital form and used as a payment or investment tool.

This amendment defined the terror financing and determines the liability. The Terrorist action means any use of force, violence, threats, or intimidation at home or abroad, for the purpose of disturbing public order or endangering community safety, interests or security at risk, harm to individuals, or terror among them, or endanger their lives, freedoms, or their general rights, or privacy or their security at risk. In case of any action of the abovementioned affected the fund and assets, that person will be considered as initiating terror.

The KYC is important to apply in dealing with currency and virtual assets to avoid money laundering, fraud and financial terrorism. Egypt takes strong measures towards money laundering and financial terrorism. Know your customer is one of those measures and all national and international banks shall comply to these measures in order to decrease the crimes occurring in that field.