Egypt

Sanctions

No

FATF AML Deficient List

No

Higher Risk

Not on EU White list equivalent jurisdictions
Corruption Index (Transparency International & W.G.I.)
World Governance Indicators (Average Score)
Failed States Index (Political Issues)(Average Score)

Medium Risk

Non - Compliance with FATF 40 + 9 Recommendations

US Dept of State Money Laundering Assessment

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ANTI-MONEY LAUNDERING

 

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 by the Financial Action Task Force (FATF) in 2009. According to that Evaluation, Egypt was deemed Compliant for 5 and Largely Compliant for 20 of the FATF 40 + 9 Recommendations. It was Partially Compliant or Non-Compliant for 3 of the 6 Core Recommendations.

 

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.

 

 

 

SANCTIONS

On 21 March 2011, the European Union adopted Council Regulation (EU) No 270/2011 ("Regulation") which placed restrictive measures on certain persons and entities identified as being responsible for the misappropriation of Egyptian state funds and persons and entities associated with them.

 

The Arab League (comprising 22 Arab member states), of which this country is a member, has approved imposing sanctions on Syria. These include: -

  • Cutting off transactions with the Syrian central bank

  • Halting funding by Arab governments for projects in Syria

  • A ban on senior Syrian officials travelling to other Arab countries

  • A freeze on assets related to President Bashar al-Assad's government

 

The declaration also calls on Arab central banks to monitor transfers to Syria, with the exception of remittances from Syrians abroad.

 

The Arab League has also boycotted Israel in a systematic effort to isolate Israel economically in support of the Palestinians, however, the implementation of the boycott has varied over time among member states. There are three tiers to the boycott. The primary boycott prohibits the importation of Israeli-origin goods and services into boycotting countries. The secondary boycott prohibits individuals, as well as private and public sector firms and organizations, in member countries from engaging in business with any entity that does business in Israel. The Arab League maintains a blacklist of such firms. The tertiary boycott prohibits any entity in a member country from doing business with a company or individual that has business dealings with U.S. or other firms on the Arab League blacklist.

 

 

BRIBERY & CORRUPTION

Rating                                                                           (100-Good / 0-Bad)

Transparency International Corruption Index                           35

World Governance Indicator – Control of Corruption             34

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

 

ECONOMY

Occupying the northeast corner of the African continent, Egypt is bisected by the highly fertile Nile valley, where most economic activity takes place. Egypt's economy was highly centralized during the rule of former President Gamal Abdel NASSER but opened up considerably under former Presidents Anwar EL-SADAT and Mohamed Hosni MUBARAK.

 

Cairo from 2004 to 2008 pursued business climate reforms to attract foreign investment and facilitate growth. Poor living conditions and limited job opportunities for the average Egyptian contribute to public discontent, a major factor leading to the January 2011 revolution that ousted MUBARAK. The uncertain political, security, and policy environment since 2011 caused economic growth to slow significantly, hurting tourism, manufacturing, and other sectors and pushing up unemployment.

 

Weak growth and limited foreign exchange earnings have made public finances unsustainable, leaving authorities dependent on expensive borrowing for deficit finance and on Gulf allies to help cover the import bill. In 2015, higher levels of foreign investment contributed to a slight rebound in GDP growth after a particularly depressed post-revolution period.

 

Agriculture - products:

cotton, rice, corn, wheat, beans, fruits, vegetables; cattle, water buffalo, sheep, goats

Industries:

textiles, food processing, tourism, chemicals, pharmaceuticals, hydrocarbons, construction, cement, metals, light manufactures

Exports - commodities:

crude oil and petroleum products, fruits and vegetables, cotton, textiles, metal products, chemicals, processed food

Exports - partners:

Saudi Arabia 9.1%, Italy 7.5%, Turkey 5.8%, UAE 5.1%, US 5.1%, UK 4.4%, India 4.1% (2015)

Imports - commodities:

machinery and equipment, foodstuffs, chemicals, wood products, fuels

Imports - partners:

China 13%, Germany 7.7%, US 5.9%, Turkey 4.5%, Russia 4.4%, Italy 4.4%, Saudi Arabia 4.1% (2015)

Investment Climate  -  US State Department

 

Despite ongoing government efforts to court international investors, Egypt’s investment climate remains challenging, with hard currency controls and shortages impeding the repatriation of profits and the importation of inputs necessary for domestic manufacturing and production. Some established companies that have been able to navigate Egypt’s currency challenges and complex regulatory structure have been rewarded, however, by significant returns on investment, in part due to limited competition. The government continues to move ahead on the economic reform agenda announced at the March 2015 Egypt Economic Development Conference (EEDC), though progress has been delayed on energy subsidy reform and the replacement of the sales tax with a value-added tax. The government remains committed to attracting international investment, including launching a large-scale industrial zone around the Suez Canal designed to attract multinational manufacturing and logistics businesses along the major intercontinental shipping route.

 

The government has concluded the political roadmap adopted in July 2013. It ratified a new constitution in January 2014 and held presidential elections in May 2014. Egypt’s first parliamentary elections under the new constitution took place in October 2015. The House of Representatives (Parliament) held its first session on January 10 2016 and has numerous economic and business-related items on its legislative agenda.

 

Egypt honors its laws, treaties, and trade agreements. It is party to 100 bilateral investment treaties, including a 1992 treaty with the United States, and is a member of the World Trade Organization (WTO), the Common Market for Eastern and Southern Africa (COMESA), 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 particular sectors, such as upstream oil and gas development, where joint ventures are required, as well as real estate.

 

Investors report there can be delays of several months for transfers of foreign exchange to be executed. Labor rules prevent companies from hiring more than 10 percent non-Egyptians (25 percent in Free Zones), and foreigners are not allowed to operate sole proprietorships or simple partnerships. A foreign company wishing to import for trading purposes must do so through a wholly Egyptian-owned importer. Inadequate protection of intellectual property rights (IPR) is a significant hurdle in certain sectors to direct investment in Egypt. Egypt remains on the U.S. Trade Representative’s Special 301 Watch List.

Egypt is a signatory to international arbitration agreements, although Egyptian courts do not always recognize foreign judgments. Dispute resolution is slow, with the time to adjudicate a case to completion averaging three to five years. Other obstacles to investment include excessive bureaucracy, regulatory complexity, a mismatch between job skills and labor market demand, slow and cumbersome customs procedures, and non-tariff trade barriers.

 

Country Links
Egyptian Money Laundering and Terrorist Financing Combating Unit (EMLCU)
Egyptian Financial Supervisory Authority (EFSA)
Central Bank of Egypt
Other Useful Links
FATF
US State Department
Transparency International
World Bank
CIA World Factbook

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