KYC and Customer Due Diligence in Egypt

In recent years, Egypt has positioned itself as one of the most dynamic economies in the Middle East and North Africa (MENA) region, attracting local entrepreneurs and international investors alike. With large-scale infrastructure projects, a growing financial sector, and expanding opportunities in fintech, real estate, and manufacturing, Egypt has become a hub for cross-border trade and investment.

However, in parallel with these opportunities, there is a heightened focus on compliance with anti-money laundering (AML) and counter-terrorist financing (CTF) regulations. At the heart of these compliance obligations lies the concept of Know Your Customer (KYC) and Customer Due Diligence (CDD).

KYC and CDD are not only legal requirements but also fundamental business practices that protect institutions from financial crimes, reputational damage, and regulatory penalties. For businesses operating in or with Egypt, understanding the Egyptian legal framework, the role of regulatory bodies, and the compliance expectations is essential. This article provides a deep dive into the Egyptian landscape, drawing from local laws, official entities, and global standards, offering a practical guide for companies in Egypt and abroad.

The Legal Framework in Egypt

Egypt’s anti-money laundering and counter-terrorism financing (AML/CTF) system is built on several key legislative and regulatory pillars.

1- Law No. 80 of 2002 (Anti-Money Laundering Law)

The cornerstone of Egypt’s AML regime is Law 80 of 2002, which established the general framework for combating money laundering. This law defined money laundering offenses, introduced the obligation to report suspicious transactions, and created the Egyptian Money Laundering and Terrorist Financing Combating Unit (EMLCU).

2-Law No. 154 of 2022

In 2022, significant amendments were introduced through Law 154 of 2022, enhancing the scope of AML obligations to cover terrorist financing explicitly. These amendments aligned Egypt more closely with international standards issued by the Financial Action Task Force (FATF), requiring:

• Clearer definitions of beneficial ownership.

• Expanded reporting obligations for financial institutions and designated non-financial businesses (DNFBPs).

• Stronger sanctions for non-compliance.

3-Prime Ministerial Decree No. 3331 of 2023

The executive regulations issued under Decree 3331/2023 operationalize the obligations under the AML law. These regulations provide detailed procedures for KYC, CDD, and Enhanced Due Diligence (EDD), especially regarding high-risk customers, politically exposed persons (PEPs), and cross-border transactions.

4-Sectoral Regulations

Beyond the general AML law, each regulator has issued sector-specific guidelines:

• Central Bank of Egypt (CBE) issues detailed instructions for banks and financial institutions.

• Financial Regulatory Authority (FRA) oversees non-banking financial institutions, including insurance, leasing, factoring, securities, and microfinance.

• Ministry of Justice and General Prosecutor enforce judicial aspects of AML/CTF violations.

This layered framework ensures that Egypt’s AML system is comprehensive, covering banking, non-banking, and DNFBPs such as lawyers, accountants, and real estate brokers.

Regulatory Bodies in Egypt

1-Central Bank of Egypt (CBE)

The CBE is the principal regulator for banks and licensed financial institutions. It enforces strict KYC requirements, obliging banks to:

• Identify and verify customers before opening accounts.

• Maintain up-to-date customer information.

• Monitor transactions for unusual or suspicious activity.

The CBE also supervises the implementation of electronic KYC (e-KYC) systems, allowing banks to leverage digital identity solutions while ensuring compliance with AML rules.

2-Egyptian Money Laundering and Terrorist Financing Combating Unit (EMLCU)

The EMLCU, established under Law 80/2002, is Egypt’s Financial Intelligence Unit (FIU). It plays a central role in:

• Collecting and analyzing suspicious transaction reports (STRs).

• Coordinating with law enforcement and judicial authorities.

Cooperating internationally with other FIUs through the Egmont Group.

3-Financial Regulatory Authority (FRA)

The FRA supervises the non-banking financial sector, which includes:

• Insurance companies.

• Capital market participants (brokers, investment funds, asset managers).

• Leasing and factoring companies.

• Microfinance institutions.

The FRA’s AML directives align with those of the CBE but are tailored to the risks specific to non-banking activities.

4-Other Relevant Bodies

• Ministry of Justice & General Prosecutor: Responsible for legal proceedings against offenders.

• Egyptian Exchange (EGX): Applies listing rules requiring disclosure of beneficial ownership.

• Ministry of Investment: Oversees corporate registrations, where beneficial ownership data is increasingly required.

KYC Requirements in Egypt

1-Customer Due Diligence (CDD)

CDD is the process by which financial institutions and DNFBPs establish the identity of a customer and assess their risk profile. In Egypt, CDD obligations require:

• Collecting official identity documents (e.g., national ID for individuals, commercial registry for companies).

• Verifying the authenticity of the documents.

• Assessing the purpose and nature of the relationship.

2-Enhanced Due Diligence (EDD)

For higher-risk customers, especially politically exposed persons (PEPs) or clients from high-risk jurisdictions, institutions must apply EDD, which includes:

• Obtaining senior management approval before establishing the business relationship.

• Conducting enhanced monitoring of transactions.

• Requesting additional information on the source of funds.

3-Beneficial Ownership Disclosure

Egypt has placed increasing emphasis on the identification of the ultimate beneficial owner (UBO). Companies must disclose their UBOs during registration and financial institutions are obliged to verify this information to prevent the misuse of corporate structures for money laundering.

4-Record-Keeping Obligations

Financial institutions must retain all records related to KYC, CDD, and transactions for at least five years, as stipulated by the AML law.

5-Suspicious Transaction Reporting (STRs)

Institutions are required to file STRs with the EMLCU without tipping off the customer. Failure to report can lead to severe penalties, including fines and revocation of licenses.

International Alignment

Egypt’s AML framework is aligned with global standards, ensuring credibility and international cooperation.

• Financial Action Task Force (FATF): Egypt has implemented most FATF recommendations.

• MENAFATF: As a founding member of the Middle East and North Africa FATF, Egypt undergoes periodic evaluations and peer reviews.

• Egmont Group: Membership allows the EMLCU to exchange financial intelligence with over 160 FIUs worldwide.

This alignment ensures that Egypt remains integrated into the global financial system and reduces the risk of being designated as a high-risk jurisdiction.

Practical Applications in Egypt

1-Banking Sector

Banks such as CIB, NBE, and Banque Misr have implemented advanced e-KYC solutions, enabling online account opening while verifying customer identities through digital tools approved by the CBE.

2-Non-Banking Financial Sector

Insurance companies and capital market participants must comply with FRA regulations, including mandatory KYC for policyholders and investors.

3-Fintech and Digital Identity

The rise of fintech in Egypt (mobile wallets, payment services, peer-to-peer lending) has introduced innovative KYC models. The CBE has issued specific guidelines to ensure that fintech companies remain compliant while supporting financial inclusion.

Challenges and Opportunities

Despite significant progress, Egypt faces certain challenges in fully implementing robust KYC/CDD systems:

• Informal Economy: A large portion of economic activity remains undocumented, complicating customer verification.

• Cross-Border Transactions: With Egypt’s role as a trade hub, monitoring international flows is complex.

• Technology Adoption: While e-KYC is advancing, full integration across all sectors is still developing.

• Data Protection: Balancing privacy rights with compliance obligations remains a challenge.

At the same time, opportunities exist:

• Digital transformation and fintech growth are driving modern compliance solutions.

• International cooperation boosts Egypt’s credibility as a safe investment destination.

• Regulatory reforms continue to align Egypt with best practices, creating a stable business environment.

Egypt has established a strong legal and regulatory foundation for KYC and CDD, supported by active regulators and alignment with global standards. While challenges remain—particularly in addressing the informal economy and expanding digital solutions—the trajectory is clear: Egypt is moving toward a more transparent, secure, and internationally integrated financial system.

For businesses and investors, compliance with KYC and CDD requirements is not optional—it is a prerequisite for operating successfully in Egypt. By understanding the local legal landscape, engaging with regulators, and adopting modern compliance tools, companies can mitigate risks while taking full advantage of the opportunities in one of the region’s most promising markets.