Arab Finance: The Board of Directors of the Financial Supervision Authority, headed by Dr Muhammad Farid Resolution No. 161 of 2024By introducing amendments to the regulatory controls to combat money laundering and terrorist financing for entities working in the field of non-banking financial activities.
The controls contained in the decision apply to Egyptian stock exchanges, financial institutions, and natural persons licensed to practice any business related to a non-banking financial activity. The provisions of the Anti-Money Laundering Law and its executive regulations and the decisions issued in implementation thereof also apply to what is not specifically provided for in the decision.
The amendments include permitting the internal controller (compliance officer) to combine the tasks assigned to him and the competencies of the person responsible for combating money laundering and terrorist financing in institutions licensed to practice non-banking financial activities, provided that there is no prejudice or conflict with the duties of the job of each of them.
The Authority approved the leave, given the functional similarity in the nature of the tasks for both positions, and after the approval of the Anti-Money Laundering Unit, as it is consistent with international standards in this regard.
The decision also included reducing the periodicity of the report prepared by the internal auditor on the results of the work of the director responsible for combating money laundering and terrorist financing to once every calendar year instead of once every six months. The report should be prepared within fifteen days from the end of the period for which the report was submitted, to be during the month of January. Every year.
This report must be submitted to the financial control after its approval by the entity’s board of directors within forty-five days from the end of the period referred to, taking into account the nature of the activity practiced by the entity, its size, the quality of customers and the products or services provided, and to continuously ensure full compliance with the legal requirements and regulatory procedures issued in This matter.
The Internal Audit Officer is also obligated to inform the Financial Supervisory Authority and the entity’s Board of Directors of any matters that may affect the requirements of combating money laundering and terrorist financing as soon as they occur.
Based on the keenness to ensure that the entities covered by the decision and subject to the Authority’s oversight fulfill their supervisory responsibilities and facilitate the submission of periodic reports, the new Board of Directors’ decision would provide the opportunity for financial institutions to submit their reports prepared in the field of combating money laundering and terrorist financing during the month of January of each year, since those The amendments have specified the time period for which these reports are prepared to be at the end of each past Gregorian year in accordance with the decision and the provisions it contains.
Regarding the targeted financial penalties associated with negative lists, the entity covered by the decision must immediately freeze, without delay or prior notice, all funds, securities, financial instruments, or other assets owned by persons or entities listed on the lists.
The entities included in the decision must also not deal directly or indirectly with any natural or legal person from the names listed on the lists, in addition to refraining from making any money, papers, financial instruments, other assets, economic resources, or financial services available. , or any other related services, directly or indirectly, to those whose names appear on the lists.
The Financial Supervision Decision also obligated entities licensed to practice non-banking financial activities to take into account indicative indicators when identifying operations suspected of involving money laundering or terrorist financing.
These indicative indicators are general indicators for all activities, and others specific to securities activities, insurance, real estate financing, financial leasing, factoring, financing activity for medium, small and micro enterprises, and consumer financing.
The decision comes in response to the recent amendments made to the executive regulations of the Anti-Money Laundering and Combating the Financing of Terrorism Law issued by the Prime Minister No. 3331 of 2023, and culminates the efforts of permanent cooperation and coordination between the Financial Supervision Authority and the Anti-Money Laundering and Combating the Financing of Terrorism Unit, in a way that coordinates with the unit regarding the importance of Financial institutions’ commitment to the results of the national assessment of money laundering and terrorist financing risks.
The decision regulates the issue of internal control regarding combating money laundering and the financing of terrorism, and obligates the entities covered by the decision to prepare an internal work guide that includes systems and procedures to ensure the proper application of the related rules and procedures, and includes identifying mechanisms for verifying compliance with the internal system, and stating the necessary requirements for managing money laundering and terrorist financing risks. Determine procedures to reveal the names of all clients, beneficial owners, and any other parties.
The decision requires companies working in the field of providing non-banking financial services to notify the Anti-Money Laundering and Terrorist Financing Unit upon discovering any operations that are suspected to be proceeds or include money laundering, terrorist financing, or an attempt to commit them, immediately upon discovery and not exceeding the prescribed period. The executive regulations of the Anti-Money Laundering Law. Entities must also provide the Unit, established pursuant to Presidential Decree No. 164 of 2002, immediately with any information or data made available to it that would reinforce or negate all or some of the reasons and grounds for suspicion included in the notices of suspicion previously sent to the Unit, along with the documents being attached.
The legal persons addressing the provisions of the decision are also committed to principles, including the responsibility to develop and adopt a clear policy regarding combating money laundering and the financing of terrorism, and to establish internal rules, procedures and systems that help them achieve this.
Those covered by the decision must also adhere to the risk-based approach, in accordance with the requirements of the law, its executive regulations, and the controls contained in the decision, which includes identifying, evaluating, and understanding the money laundering and terrorist financing risks to which they may be exposed, and identifying and evaluating the money laundering and terrorist financing risks, especially those that may arise from Using modern technological systems while providing services and products.
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