FATF Status

Egypt is not on the FATF List of Countries that have been identified as having strategic AML deficiencies

Compliance with FATF Recommendations

The last Mutual Evaluation Report relating to the implementation of anti-money laundering and counter-terrorist financing standards in Egypt was undertaken in 2021. According to that Evaluation, Egypt was deemed Compliant for 9 and Largely Compliant for 23 of the FATF 40 Recommendations. It was deemed Highly Effective for 0 and Substantially Effective for 4 of the Effectiveness  & Technical Compliance ratings.

US Department of State Money Laundering assessment (INCSR)

Egypt was last deemed a Jurisdiction of Primary Concern in the US Department of State 2018 International Narcotics Control Strategy Report (INCSR). The Overview from that report are as follows: -

OVERVIEW

Egypt is not considered a regional financial center or a major hub for money laundering. The Government of Egypt has shown increased willingness to tackle money laundering, but Egypt remains vulnerable by virtue of its large informal, cash-based economy. There are estimates that as much as two-thirds of the population does not have bank accounts, and the informal economy accounts for approximately 40 percent of the GDP. Consequently, extensive use of cash is common. The central bank and the Federation of Egyptian Banks aim to promote financial inclusion by incentivizing individuals and small businesses to enter the formal financial sector. In February 2017, the president issued a decree establishing the National Council for Payments (NCP), tasked with limiting the use of cash, promoting the use of electronic payment mechanisms, and integrating citizens and enterprises into the banking system. In addition, the FIU issued regulations for mobile phone-based payments. There are now 9 million mobile payment accounts in Egypt.

Countering corruption remains a long-term focus. Investigations of public figures and entities have resulted in the arrests of Alexandria’s deputy governor and the secretary general of Suez on several corruption charges, and the investigation into five members of parliament alleged to have sold hajj visas.

The government should continue to build its capacity to successfully investigate and prosecute money laundering offenses. In particular, Egypt needs to build the capacity of the judicial system related to money laundering. Egypt also should work to more effectively manage all aspects of its asset forfeiture regime, including identification, seizure, and forfeiture.

Rating                                                                           (100-Good / 0-Bad)

Transparency International Corruption Index                           35

World Governance Indicator – Control of Corruption             26

Corruption is an obstacle for businesses in Egypt. Bribery, embezzlement, tampering with official documents and extortion are among the forms of corruption encountered. A culture of nepotism and favoritism has tainted Egypt’s economy and its investment climate. Baksheesh, literally meaning bribery, is part of Egyptians' everyday life. A poor legal framework and a widespread culture of corruption leave businesses reliant on strong connections and the use of middlemen (known as wasta) to operate, and well-connected businesses enjoy privileged treatment. Egypt’s Penal Code criminalizes several forms of corruption such as active and passive bribery and abuse of office, but existing legislation is unevenly enforced, leading government officials to act with impunity. Facilitation payments and gifts are an established part of "getting things done," despite these practices being criminalized under Egyptian law. For further information - GAN Integrity Business Anti-Corruption Portal

The Egyptian economy was particularly hard hit by the Russian further invasion of Ukraine in February 2022, which caused many foreign investors to flee emerging markets, including Egypt, and stressed the country’s budget as it struggled to confront rising global wheat and energy prices while defending the value of the Egyptian pound.  On December 17, 2022, the International Monetary Fund (IMF) approved- a 46-month arrangement for Egypt under the Extended Fund Facility worth $3 billion. The IMF loan was conditioned on the Government of Egypt (GoE) undertaking a number of structural reforms, including the adoption of a flexible exchange rate, implementation of the State Ownership Policy to encourage privatization in the Egyptian economy, and the lifting of import restrictions that were imposed in the spring of 2022. The IMF loan was also conditioned on $14 billion in co-financing–$8.7 billion of which is expected to come from the sale of state-owned assets and the remaining $5.4 billion of which is expected to come from loans from other sources. Egypt previously undertook a set of difficult macroeconomic reforms as part of a three-year, $12 billion IMF program in November 2016.

The GoE increasingly understands that attracting foreign direct investment (FDI) is key to addressing many of its economic challenges and has stated its intention to create a more conducive environment for FDI.  However, investors continue to face obstacles, including excessive bureaucracy, lack of transparency, uneven enforcement of laws and regulations, difficulties accessing foreign currency to repatriate profits or import goods, a shortage of skilled labor, cumbersome customs procedures, corruption, and intellectual property issues. FDI inflows for 2021 were $5.1 billion, down from $5.5 billion in 2020 amid sharp global declines in FDI due to the pandemic, according to data from the United Nations Commission on Trade and Development (UNCTAD). UNCTAD ranked Egypt as the second-largest FDI destination in Africa in 2021, and Egypt was the third-largest FDI recipient in the Arab region in 2021, according to the Egyptian Cabinet’s Information and Decision Support Center (IDSC).

Egypt has introduced several regulatory reform laws, including the Investment Law (Law 72 of 2017); a “New Company” law and a Bankruptcy law in 2018; and a new Customs Law in 2020.  These laws aim to improve Egypt’s investment and business climate and help the economy realize its full potential.  The GoE issued implementing regulations for the Customs Law (Law 207 of 2020) in May 2022, which aims to streamline aspects of import and export procedures, including through a single-window system, electronic payments, and expedited clearances for authorized companies. In December 2022, Law 175 of 2022 was published in the Official Gazette, making significant amendments to the Egyptian Competition Law 3 of 2005 related to the approval process for mergers and acquisitions.

Egypt hosted the United Nations Climate Change Conference (COP 27) in November 2022 and will retain the COP presidency, including its influence over climate negotiations, until the United Arab Emirates (UAE) takes up the role in November 2023. Egypt continues to adapt to climate change, ranking 128th out of 181 countries in terms of its readiness for climate change. It faces severe water scarcity and misuse and related impacts on agricultural production. Egypt has significant potential in renewable energy generation, particularly in wind and solar energy, and is investing heavily in green hydrogen, both for domestic use and eventual export. It will add over 4 GW of renewable capacity over the next five years. The GoE is aiming to raise renewable contributions 20 percent in 2023, with most of the growth coming from wind and solar capacity. At the same time, the GoE is expected to begin decommissioning 5 GW of gas-fired power plants this year as part of the $15 billion NWFE (Nexus on Water, Food, and Energy) program supported by the U.S. government, the European Bank for Reconstruction and Development, and a number of European countries.

The government continues to seek investment–to finance several mega projects, including the construction of a new administrative capital and smart cities; and to promote mineral extraction opportunities.  Egypt intends to capitalize on its location bridging the Middle East, Africa, and Europe to become a regional trade and investment gateway and energy hub. It also hopes to attract information and communications technology (ICT) sector investments for its digital transformation program; however. investors continue to face legal and regulatory challenges in the ICT sector.

Egypt is a party to more than 100 bilateral investment treaties, including with the United States.  It is a member of the World Trade Organization (WTO), the African Continental Free Trade Agreement (AfCFTA), and the Greater Arab Free Trade Area (GAFTA).  In many sectors, there is no legal difference between foreign and domestic investors. Special requirements exist for foreign investment in certain sectors, such as upstream oil and gas and real estate, where joint ventures are required.

Country Links

Egyptian Money Laundering and Terrorist Financing Combating Unit (EMLCU)

Egyptian Financial Supervisory Authority (EFSA)

Central Bank of Egypt