The Financial Regulatory Authority

FINANCIAL REGULATORY AUTHORITY

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Chairman of the Authority

Board of Directors Decision No. (2) of 2021 dated 18/1/2021

Regarding Supervisory Controls in the Field of Combating Money Laundering and Financing of Terrorism for Entities Working in Non-Banking Financial Activities

The Board of Directors of the Financial Regulatory Authority,

Having reviewed:

• Law No. (54) of 1975 on Private Insurance Funds;
• Law No. (10) of 1981 on Supervision and Control of Insurance in Egypt;
• Law No. (146) of 1988 regarding companies operating in the field of receiving funds for investment;
• Capital Market Law issued by Law No. (95) of 1992;
• Central Depository and Registry of Securities and Financial Instruments Law issued by Law No. (93) of 2000;
• Real Estate Financing Law issued by Law No. (148) of 2001;
• Law No. (80) of 2002 on Combating Money Laundering;
• Law No. (10) of 2009 regulating supervision on non-banking financial markets and instruments;
• Law No. (141) of 2014 regulating the activity of financing medium, small, and micro-enterprises;
• Law No. (8) of 2015 concerning the regulation of terrorist entities and terrorists lists;
• Law No. (94) of 2015 on Combating Terrorism;
• Law No. (176) of 2018 regulating the activity of financial leasing and installment sales;
• Law No. (18) of 2020 regulating the consumer financing activity;
• Presidential Decision No. (191) of 2009 regarding the provisions organizing the management and financial affairs of the Egyptian Exchange;
• The Statute of the Financial Regulatory Authority issued by Presidential Decision No. (192) of 2009;
• Board of Directors Decision No. (53) of 2018 regarding controls for granting and maintaining licenses and rules enabling shares of companies working in non-banking financial activities;
• Board of Directors Decision No. (94) of 2018 regarding rules and procedures for dealing with unlisted securities and transfer of ownership procedures;
• Board of Directors Decision No. (120) of 2019 regarding anti-money laundering and combating the financing of terrorism controls for entities working in non-banking financial activities;

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And Board of Directors Decision No. (121) of 2019 regarding controls for registering the Anti-Money Laundering and Combating the Financing of Terrorism Compliance Officer at entities working in non-banking financial activities with the Authority;

And Board of Directors Decision No. (23) of 2020 regarding supervisory controls for targeted sanctions lists and financial restrictions in the field of combating terrorism and proliferation of weapons of mass destruction for entities working in non-banking financial activities;

And Board of Directors Decision No. (62) of 2020 regarding anti-money laundering and combating the financing of terrorism controls for companies working in the consumer financing activity;

And Board of Directors Decision No. (100) of 2020 regarding corporate governance rules for companies working in non-banking financial activities;

And after coordination with the Anti-Money Laundering and Combating the Financing of Terrorism Unit;

And after approval by the Board of Directors in its session held on 18/1/2021;

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Decided

(Chapter One)

Scope of Application and Definitions

(Article One)

Scope of Application

The anti-money laundering and combating the financing of terrorism controls contained in this Decision shall apply to the Egyptian Stock Exchanges, financial institutions, and natural persons licensed by the Authority to practice one of the non-banking financial activities.

The provisions of the Law on Combating Money Laundering and its Executive Regulations, and decisions issued in implementation thereof, shall also apply to matters not specifically addressed in this Decision.

(Article Two)

Definitions

In applying the provisions of this Decision, the following terms shall have the meanings indicated alongside each:

The Authority:
The Financial Regulatory Authority.

The Unit:
The Anti-Money Laundering and Combating the Financing of Terrorism Unit established under Law No. (80) of 2002.

The Law and its Executive Regulations:
The Law on Combating Money Laundering issued by Law No. (80) of 2002 and its Executive Regulations and amendments thereto.

Financial Institutions:
Legal persons licensed by the Authority to practice non-banking financial activities.

Money Laundering:
Any of the acts stipulated in Article (2) of the Law on Combating Money Laundering issued by Law No. (80) of 2002.

Financing of Terrorism:
Any of the acts stipulated in Article (3) of Law No. (94) of 2015 on Combating Terrorism.

Terrorist Entities:
Associations, organizations, groups, gangs, cells, companies, unions, or similar entities, or other gatherings regardless of their nature or legal or factual form, provided they commit any of the acts stipulated in Article (1) of Law No. (8) of 2015 regulating terrorist entities and terrorists lists.

Negative Lists:
The lists of terrorist entities and terrorists organized under Law No. (8) of 2015, and lists issued by the United Nations Security Council related to the financing of terrorism and the financing of proliferation of weapons of mass destruction, and any other lists prepared by financial institutions or deemed necessary to refer to.

Unusual Transactions:
Transactions that appear exceptional compared to the pattern of transactions accepted by customers, and are identified through reports and internal systems of financial institutions.

Suspicious Transactions:
Transactions that, upon examination, reveal objective grounds for suspicion that they constitute proceeds from any crime or involve money laundering or financing of terrorism.

Proceeds:
Funds resulting or traceable, directly or indirectly, from the commission of any predicate crime.

Predicate Crime:
Any act committed as a crime or misdemeanor under Egyptian law, whether committed inside or outside the country, provided it is punishable in both countries.

Customer:
The natural or legal person or legal arrangement for whom financial institutions open an account, execute a transaction on their behalf, or provide a service.

Beneficial Owner:
The natural person who actually owns or controls the customer, or the natural person on whose behalf a transaction is executed, including persons who exercise effective control over the customer, whether the customer is a legal person or a legal arrangement.

(Chapter Two)
General Provisions

(Article Three)
Basic Principles

Entities subject to the provisions of this Decision must adhere to the following principles:

Principle One: Responsibility
Establishing a clear policy on combating money laundering and financing of terrorism, and establishing internal rules, procedures, and systems to achieve this, taking into account the nature, size, and type of customers and products or services provided, and ensuring continuous full compliance with legal requirements and regulatory procedures in accordance with the Law and its Executive Regulations, these controls, and other related rules.

Principle Two: Adoption of a Risk-Based Approach In accordance with the requirements of the Law and its Executive Regulations and the controls contained in this Decision, including identifying, assessing, and understanding the risks of money laundering and financing of terrorism to which they may be exposed, documenting this in writing and electronically, and updating this assessment and related information periodically, taking into account any risks identified at the local level and any variables that may change the degrees of money laundering and financing of terrorism risks.

Entities subject to this Decision must also identify and assess money laundering and financing of terrorism risks arising from their use of modern technological systems in providing services and products, or providing any new services or products relying on these systems, and take appropriate measures to manage these risks. When identifying and assessing these risks, they must consider, at a minimum, the following elements:

• Types of current and prospective customers.
• Products and services provided or intended to be provided.
• Technologies used or intended to be used.
• Risks of reliance on third parties, and geographical risks.

They must also take necessary measures and procedures to deal with identified risks.

Principle Three: Good Selection and Continuous Training Adopting comprehensive policies and procedures for selecting and appointing staff with competence and professional skill and ensuring their integrity, and subjecting employees to continuous training in combating money laundering and financing of terrorism as stipulated in this Decision.

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(Article Four)

Customer Due Diligence Procedures

Entities subject to this Decision must adhere to customer due diligence procedures and other relevant rules, controls, and procedures issued by the Unit regarding combating money laundering and financing of terrorism, immediately upon establishing internal rules for identifying customers (natural or legal persons) and beneficial owners.

---

The Financial Regulatory Authority

FINANCIAL REGULATORY AUTHORITY

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Chairman of the Authority

(Article Five)

Internal Control System

Entities subject to this Decision must prepare an internal operations manual approved by their Board of Directors and submitted to the Authority immediately upon approval. This manual must include systems and procedures to ensure proper application of rules, controls, and procedures related to combating money laundering and financing of terrorism, considering the Law and its Executive Regulations. This manual must be reviewed periodically to assess its updates and development, and necessary measures must be taken. The manual must include, at a minimum, the following:

1. Clear detailed procedures for combating money laundering and financing of terrorism, and detailed written procedures considering precise identification of duties and responsibilities.
2. Mechanisms for verifying compliance with the internal system established to combat money laundering and financing of terrorism.
3. Requirements for effectively managing risks related to money laundering and financing of terrorism, including human expertise capable of dealing with these risks and the necessary technological infrastructure.
4. Internal control systems for identifying unusual transactions or suspicious customers, and placing them under the supervision of the Anti-Money Laundering and Combating the Financing of Terrorism Compliance Officer.
5. Procedures to detect the presence of employees on negative lists and procedures to be taken to verify customer identity, whether upon opening an account or starting a contract, and re-matching procedures to be followed when updating these lists.
6. Customer classification systems based on money laundering and financing of terrorism risk levels, and management of these risks, to be updated periodically.
7. Procedures to ensure no collusion between employees of the entity subject to this Decision and their customers.
8. Systems ensuring that the internal auditor or audit committees, as applicable, in coordination with the Manager responsible for combating money laundering and financing of terrorism, examine the systems in place to ensure their efficiency and effectiveness in combating money laundering and financing of terrorism, and propose necessary preventive measures or updates and development.
9. Rules for retaining documents and records that entities subject to this Decision must keep, and specifying retention methods.
10. Plans and programs for training employees to raise awareness and improve their competence regarding rules and systems established for combating money laundering and financing of terrorism.

---

Smart Village, Building 136, Giza, Egypt
Postal Code: 110
Tel: +202 35345350
Fax: +202 35370036
WWW.FRA.GOV.EG

Building Bridges not Walls
Building Bridges not Walls

```markdown  
# Chairman of the Authority

Furthermore, financial institutions with subsidiaries or branches outside the Arab Republic of Egypt must apply anti-money laundering and combating the financing of terrorism programs, according to the risks and volume of business, which include the policies, procedures, and internal controls mentioned in the above paragraphs, in addition to the following:

- Establishing a dedicated unit to select the anti-money laundering and combating the financing of terrorism system.  
- Establishing policies and procedures for exchanging necessary information for customer due diligence and managing money laundering and financing of terrorism risks between financial institutions and their subsidiaries or branches, as applicable.  
- Establishing a mechanism to obtain information related to customers, accounts, and transactions from branches or subsidiaries through the internal auditor, external auditor, and/or the Anti-Money Laundering and Combating the Financing of Terrorism Compliance Officer when necessary for combating purposes. These mechanisms must include analysis of all information, reports, or transactions that appear unusual. Compliance with the approval of the Manager responsible for combating money laundering and financing of terrorism regarding information from branches and subsidiaries is required.

In all cases, these institutions must ensure that their subsidiaries or branches comply with anti-money laundering and combating the financing of terrorism rules in accordance with the Law and its Executive Regulations and this Decision.

## (Article Six)  
### Reporting Procedures for Suspicious Transactions

Entities subject to this Decision must immediately notify the Unit of all transactions suspected of constituting money laundering or financing of terrorism crimes, including attempts to carry out such transactions, regardless of the transaction size. This notification must be made within a period not exceeding two working days from the date suspicion arises with the Manager responsible for combating money laundering and financing of terrorism. The notification must be on the form approved by the Unit for this purpose. The notification form must include transactions suspected of constituting money laundering or financing of terrorism crimes or attempts to carry them out, specifically:

1. Details of the suspicious transaction, its parties, circumstances of discovery, and current status.  
2. Identification of the amounts involved in the suspicious transaction.  
3. Reasons and grounds for suspicion relied upon.  
4. The opinion of the Manager responsible for combating money laundering and financing of terrorism at the reporting entity.

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## (Article Seven)  
### Training in Combating Money Laundering and Financing of Terrorism

Entities subject to this Decision must establish necessary plans and programs to train their employees at least once a year to raise awareness and improve their competence regarding the application of rules and systems established for combating money laundering and financing of terrorism. This ensures they are informed of recent developments related to general methods and trends in combating money laundering and financing of terrorism, and local, regional, and global updates in this field. The development and implementation of this program must be coordinated with the Unit and the Authority, considering the following:

1. Training must be comprehensive for all employees and employees of subsidiaries, ensuring their preparation to properly perform their duties, keep pace with global development, and reinforce proper professional work standards.  
2. Utilizing training programs provided by the Financial Services Institute affiliated with the Authority and other specialized institutes and centers, internally or externally, regarding combating money laundering and financing of terrorism, within the framework of the general qualification and training policy established by the Unit and the Authority.  
3. Coordination with the Manager responsible for combating money laundering and financing of terrorism regarding the selection of employees nominated to attend training programs in this field.

---  
**Smart Village, Building 136, Giza, Egypt**  
**Postal Code: 110**  
**Tel: +202 35345750**  
**Fax: +202 35370036**  
**WWW.FRA.GOV.EG**

*Building Bridges not Walls*  
*Building Bridges not Walls*

# (Article Eight)  
## Retention of Records and Documents

Entities subject to this Decision must retain the following records and documents:

1. Records and documents related to customer and beneficial owner identification, including all data and information related to them, such as account opening contracts, non-banking financial service provision contracts, and other documents related to these contracts, specifically documents related to matching performed regarding lists prepared for terrorist entities and terrorists, whether upon opening an account, starting a contract, or updating these lists. Also, copies of identity verification documents, correspondence with the customer, and documents proving authorization to deal on behalf of customers.

2. Records and documents related to transactions conducted with customers, including sufficient data to identify details of each transaction separately.

3. Records and documents related to unusual transactions, including evidence of review of these transactions and decisions made regarding them, any retained copies, and reasons relied upon for retention.

4. Annual periodic reports submitted to the Unit and the Authority regarding the evaluation of systems and procedures for combating money laundering and financing of terrorism.

5. Records of suspicious transactions sent to the Unit, including copies of notifications sent to the Unit regarding these transactions and all data and documents related to them.

6. Records and documents related to training programs, including data on all training programs in combating money laundering and financing of terrorism received by employees, names of trainees, departments or divisions they work in, training program content, date of holding, duration, and the entity providing the training, whether internal or external.

# (Article Nine)  
## Conditions to be Followed in Retaining Records and Documents

Retention of records and documents as mentioned in the previous Article must be organized and easy to facilitate rapid retrieval of data contained in those records or documents and to provide requested data and information fully and without delay. Retention of all records and documents must be in paper and electronic formats in a secure manner, with backup copies kept in another secure location.

Retention of records and documents must be for the following periods:

(a) Records and documents related to customer and beneficial owner identification:  
At least five years from the date the relationship with the customer ends.

(b) Records, documents, and reports related to unusual transactions conducted with customers:  
At least five years from the date the relationship with the customer ends, or the date the relationship ends in case of no ongoing business relationship.

(c) Training records:  
At least five years from the date the training ends.

(d) Records and documents related to unusual transactions retained by the Manager responsible for combating money laundering and financing of terrorism:  
At least five years from the date of retention.

(e) Records and documents related to suspicious transactions:  
At least five years from the date the suspicious transaction was sent to the Unit, or until a final decision or judgment is issued regarding the transaction, whichever is longer.

(f) Annual periodic reports prepared by the Anti-Money Laundering and Combating the Financing of Terrorism Compliance Officer:  
At least five years from the date these reports are prepared.

# (Article Ten)  
## Obligations of the Internal Audit Manager

The Internal Audit Manager (or the organizational unit assigned to internal audit work) at entities subject to this Decision must prepare a periodic report every six months to be presented to the Board of Directors of the entity regarding the results of the work of the Anti-Money Laundering and Combating the Financing of Terrorism Compliance Officer, taking into account the nature of the activity practiced, its size, the type of customers, and the products or services provided, and ensuring continuous full compliance with legal requirements and regulatory procedures issued in this regard. This report must be submitted to the Authority, approved by the entity's Board of Directors, within fifteen days from the date the period covered by the report ends.

(Article Eleven)  
## Obligations of the External Auditor

Without prejudice to the provisions of prevailing legislation regarding external auditors, the external auditor of entities subject to this Decision must review the internal control environment of the entity whose work they are auditing, and ensure compliance with supervisory rules and instructions issued regarding combating money laundering and financing of terrorism and the financing of proliferation of weapons of mass destruction. They are obligated to prepare an annual report on measures taken in this regard and submit it to the Authority within thirty days from the date the period covered by the report ends. The report must specifically include the extent of the entity's compliance with the following:

1. Including in the internal operations manual and applied systems controls for identifying the identity and legal status of the declarant and beneficial owners, whether natural or legal persons.  
2. Appointment of the Anti-Money Laundering and Combating the Financing of Terrorism Compliance Officer and their substitute, and their specific data.  
3. Customer classification data according to risk levels.  
4. The entity's status regarding updating customer data.  
5. Keeping records they are required to retain according to legislation issued in this regard, and updating their content and data.  
6. Updating the necessary training material to train employees, ensuring they are informed of recent developments related to general methods and trends in combating money laundering and financing of terrorism and the financing of proliferation of weapons of mass destruction, and local, regional, and global updates in this field, as well as the entity's status regarding applying a training plan suitable for the number of employees and implementing it.  
7. Submitting periodic reports they are obligated to submit to the Unit and the Authority in the field of combating money laundering and financing of terrorism.

Smart Village, Building 136, Giza, Egypt  
Postal Code: 110  
Tel: +202 35345350  
Fax: +202 35370036  
WWW.FRA.GOV.EG

Building Bridges not Walls  
Building Bridges not Walls

---

The Financial Regulatory Authority  
FINANCIAL REGULATORY AUTHORITY

Chairman of the Authority

(Article Twelve)  
### Indicative Indicators for Identifying Suspicious Transactions

Entities subject to this Decision must consider the following indicative indicators when identifying suspicious transactions involving money laundering or financing of terrorism:

**General indicators for all activities:**  
- Customers who refuse to provide sufficient information, or provide incorrect information, whether personal, regarding the activity, or regarding beneficial owners of the account.  
- Customers who provide identity documents with signs of forgery.  
- Customers who have difficulty describing the nature of their activity or lack general information regarding that activity.  
- Customers who show unusual interest in inquiring about systems applied for identifying unusual transactions, violation criteria, or reporting procedures for suspicious transactions.  
- Customers who belong to areas known for a high level of corruption or other illegal activities such as drug trafficking and cultivation, and arms smuggling, etc.  
- Sudden change in the standard of living of an institution employee without clear justification.  
- Transactions conducted through local or foreign non-profit entities in a manner inconsistent with the pattern or size of the offer and activity of those entities, especially if these entities are in countries known for supporting terrorism.  
- Transactions conducted through customers belonging to countries known for supporting terrorism.

**Indicators specific to securities activities:**  
- Account funding with large amounts followed by withdrawal without completing any transactions and without clear justification from the customer.  
- Transactions conducted with amounts disproportionate to the customer's activity.  
- Customer's tendency towards transactions or deals indicating a lack of investment sense, for example, lack of interest in obtaining the best price for securities traded for sale and purchase.  
- Customers who appear indifferent to risks, currencies, or other costs of securities transactions.  
- Repeated requests to transfer amounts from the customer's account to other accounts in the company without clear justification.  
- Repeated transactions whose total does not correspond to the customer's activity over a specific period.

Smart Village, Building 136, Giza, Egypt  
Postal Code: 110  
Tel: +202 35345350  
Fax: +202 35370036  
WWW.FRA.GOV.EG

Building Bridges not Walls  
Building Bridges not Walls

```markdown
# Chairman of the Authority

- Customer's lack of interest in most of the investment advice provided by the company.
- Transactions financed through banking companies or any tradable financial instruments repeatedly and without clear justification.
- Customer's deliberate execution of multiple transactions with values below the limit set by the Authority to allow cash dealing, with the intent of avoiding dealing through banks.

## Indicators specific to insurance:

---

# Financial Regulatory Authority Board Decision No. (2) of 2021

## Indicators Specific to Insurance

- Customers who appear indifferent to insurance premiums, commissions, or other insurance coverage costs.
- The insurer showing little interest in the coverages included in the policy while showing significant interest in the early cancellation date of the contract.
- Purchasing insurance policies or requesting increases in their values by large amounts disproportionate to the customer's activity.
- Repeated purchase of insurance policies where the total amount during a specific period is disproportionate to the customer's activity.
- The customer requesting insurance coverage outside the scope of their approved activity.
- Information indicating that the insurance applicant has obtained insurance policies from multiple companies for the same insurance coverage.
- Contracting for a policy with a single installment or a large amount that contradicts the customer's previous transaction patterns.
- The customer requesting an increase in the insurance policy value by a large amount to be paid in a single installment.
- Using large cash amounts to pay insurance premiums or to purchase a single-premium insurance policy.
- Contracting for policies with large amounts and requesting refunds or changing the beneficiary shortly after contracting.
- The customer requesting to borrow the maximum limit of a single-premium policy value shortly after contracting and repaying its value.
- The customer paying the insurance premium in cash, which contradicts their established payment pattern via checks or other banking instruments.
- Paying the insurance policy value or premiums via transfers from foreign parties or requesting refunds and transferring their value to foreign parties.
- Changing the beneficiaries specified in the insurance policy to include persons who have no clear relation to the customer.
- Requesting early refund of the policy value or changing its maturity date, especially when this results in material losses.

## Indicators Specific to Mortgage Financing:

- Large financing operations that have no clear economic purpose.
- The customer's indifference to the large amount of the financing installment or financing cost.
- Mortgage financing requests secured by assets owned by others or providing additional collateral owned by others with no clear link connecting them.
- Requesting mortgage financing against collateral from a bank operating outside the country without a clear reason for that.
- Unexpected early repayment of debts by the customer or other parties regarding distressed customers.
- Unusually large cash deposits disproportionate to the customer's activity.
- Repeated cash deposits where the total amount during a specific period is disproportionate to the customer's activity.
- Cases of lump-sum repayment of large amounts or repeated repayments within short periods.
- Large or repeated cash deposits made by different parties for the account of one customer without any relationship between these parties and the customer.
- Cases of full repayment in the same year the financing was granted.
- Customers who purchase properties for large amounts significantly exceeding the valuation price and cover the price difference from their own resources.

## Indicators Specific to Financial Leasing:

- Operations conducted with customers who pay financial leasing installments from accounts they hold in countries that do not have legislative systems in the field of combating money laundering or terrorist financing.
- The customer's indifference to the large amount of the financial leasing installment or financing cost.
- Large operations that have no clear economic purpose.
- Large or repeated cash deposits made by different parties for the account of one customer without any relationship between these parties and the customer.

## Indicators Specific to Installment Financing:

- The customer's indifference to the financing cost.

## Indicators Specific to Medium, Small, and Micro-Enterprise Financing Activity

- Lump-sum repayment of the financing value, particularly during the first four months of granting the financing and as the full value of the financing.
- Lack of interest in knowing financing costs, interest rates, administrative fees, etc.
- The customer having previous selective and good banking transactions but wishing to deal with an entity engaged in medium, small, and micro-enterprise financing activity at a high cost.
- Proof of the existence of another real beneficiary of the financing other than the customer who disbursed the financing.
- The customer obtaining multiple financings from different places within a short period ranging from two to six months.
- Lack of willingness to sign the Know Your Customer (KYC) form or hesitation in providing detailed personal data.
- Inability to renew the customer's National ID card validity.
- Proof of the existence of another real beneficiary of the financing other than the customer who disbursed the financing.
- Belonging to families known for the involvement of one or more of their members in criminal or terrorist activities, particularly in border governorates and local centers.
- Projects financed within border governorates, especially those requiring special attention in verifying the seriousness of the financed project and the integrity of its owner.

## Indicators Specific to Consumer Financing

- The customer's lack of willingness to sign the Know Your Customer (KYC) form or hesitation in providing detailed personal data.
- Entering into contracts for the purchase of goods or services excessively and without justification.
- The customer making unexpected early repayments of debts, whether by the customer or other parties, particularly regarding distressed customers.
- Large or repeated cash deposits made by different persons or entities for the account of one customer without any relationship between them justifying that.
- Proof of the existence of a real beneficiary of the contracted goods or services other than the customer who entered into the contract.
- Proof of payment transfers through persons other than the real beneficiary of the contracted goods or services.
- The customer belonging to provinces/villages/areas/families known for the involvement of one or more of their members in criminal or terrorist activities, particularly in governorates and local centers.

### (Chapter Three)

#### Rules Specific to Targeted Financial Sanctions and Restriction Lists

##### In the Field of Combating Terrorism and Proliferation of Weapons of Mass Destruction

###### (Article Thirteen)

### Definition of Targeted Financial Sanctions and Restriction Lists (Negative Lists)

1. The Security Council has identified the names of persons and entities subject to targeted Financial Sanctions and their financing, and organized them in the form of sanctions lists (sanctions), which are sanctions lists related to terrorism, and sanctions lists related to the financing of the proliferation of weapons of mass destruction, in accordance with a set of standards under Security Council resolutions, through independent committees monitoring requests for proposing new names for inclusion submitted by various countries, as well as requests for removal of names and requests for exemption from renewal.

2. The Financial Action Task Force (FATF) issued its Recommendation Six regarding the obligation of countries to apply targeted financial sanctions systems issued under Chapter VII of the UN Charter in accordance with Security Council resolutions, specifically those related to

**Smart Village, Building 136, Giza, Egypt**
**Postal Code: 110**
**Tel: +202 3534530**
**Fax: +202 35370036**
**WWW.FRA.GOV.EG**

*Building Bridges not Walls*
*نبني الجسور لا الحواجز*

**Financial Regulatory Authority**
**FINANCIAL REGULATORY AUTHORITY**

**Head of the Authority**

preventing and combating terrorism and its financing, and among the most important of those decisions: Decision (1267/1989/2503) and subsequent decisions regarding sanctions related to persons and entities belonging to Al-Qaeda and Daesh, and Decision (1988) regarding persons and entities related to the Taliban movement. Those decisions oblige countries to freeze without delay (within hours) funds or assets or economic resources of any person or entity under those decisions.

3. The FATF issued its previous recommendations to oblige countries to apply targeted financial sanctions systems in accordance with Security Council resolutions related to preventing and combating the proliferation of weapons of mass destruction and its financing, particularly Decision (1718) and subsequent decisions regarding the imposition of an arms embargo, asset freezes, and travel bans on persons involved in the Democratic People's Republic of Korea's nuclear program, and Decision (2331) regarding the Iranian issue and previous decisions, and those decisions oblige countries to freeze without delay funds and other assets belonging to any person or entity specified by the Security Council and ensure that no funds or other assets are made available, directly or indirectly, to or for the benefit of or for their advantage.

4. Security Council Resolution (1373) emphasized the necessity for countries to combat terrorist acts and terrorists within and outside state borders, and indicated that this requires putting in place measures to ensure the prevention and criminalization of terrorist acts, and the freezing of funds and other assets of terrorists and terrorist entities. Accordingly, a number of laws were issued to achieve effective implementation of this resolution, the most important of which is the Law Regulating Lists of Terrorist Entities and Terrorists, under which the two lists of Terrorist Entities and Terrorists were prepared, and the consequences of listing the names of persons or entities on either of these lists were determined, including the freezing of funds and other assets.

5. The Unit has established obligations regarding names listed on the Negative Lists (UN Security Council sanctions lists and the two lists of Terrorist Entities and Terrorists), which can be referred to on the Unit's website under the Negative Lists section (https://mlcu.org.eg/ar), and the section includes the following:
(a) Relevant UN Security Council lists.
(b) Updates of UN Security Council sanctions lists.
(c) Mechanism for implementing Security Council resolutions on how to apply targeted financial sanctions related to terrorism and its financing and the financing of weapons of mass destruction.

**Financial Regulatory Authority**
**FINANCIAL REGULATORY AUTHORITY**

*Building Bridges not Walls*
*نبني الجسور لا الحواجز*

**Smart Village, Building 136, Giza, Egypt**
**Postal Code: 110**
**Tel: +202 3534530**
**Fax: +202 35370036**
**WWW.FRA.GOV.EG**

17

---

**Financial Regulatory Authority**
**FINANCIAL REGULATORY AUTHORITY**

**Head of the Authority**

(d) Detailed guidelines related to how to apply targeted financial sanctions related to terrorism and its financing and the financing of weapons of mass destruction; which include: (Identifications - how to access UN Security Council lists and their updates - the entity's obligations regarding UN Security Council lists related to terrorism and its financing and the financing of weapons of mass destruction proliferation).
(e) Lists of local terrorist entities and terrorists.
(f) Obligations of relevant parties regarding the two lists of Terrorist Entities and Terrorists.

**Article Fourteen**
**Obligations of Egyptian Exchanges and Financial Institutions**

The addressees of the provisions of this Decision, being legal persons, must comply with the detailed guidelines issued by the Money Laundering and Terrorist Financing Combating Unit regarding the implementation of Security Council resolutions on targeted financial sanctions related to terrorism and its financing and the financing of weapons of mass destruction, specifically regarding UN Security Council sanctions lists related to terrorism and its financing and the financing of weapons of mass destruction, and the two lists of Terrorist Entities and Terrorists, as follows:

1. The internal policy or work procedures of the entity must include the importance of applying targeted financial sanctions without delay (i.e., within hours of the issuance of the decision to include names in the lists or remove them from them) and the subsequent procedures, which are the immediate renewal or lifting of the renewal, as well as notification of the Unit and the Authority thereof.

2. The risk management and customer acceptance policy applied by the entity must include risks related to persons and entities listed on the lists and determine appropriate procedures for dealing with them.

3. Disseminate the guidelines issued by the Unit to all entities addressed by this Decision and their branches, and ensure a good understanding of those guidelines by their employees.

4. Design customer due diligence procedures for all entities addressed by this Decision and their branches, and commit to implementing what is contained in the customer due diligence procedures prepared by the Unit regarding the Negative Lists.

5. The entity's systems, records, and internal programs must include an effective system capable of detecting the names of persons

**Financial Regulatory Authority**
**FINANCIAL REGULATORY AUTHORITY**

*Building Bridges not Walls*

**Smart Village, Building 136, Giza, Egypt**
**Postal Code: 110**
**Tel: +202 3534530**
**Fax: +202 35370036**
**WWW.FRA.GOV.EG**

18

```markdown  
# Head of the Authority

listed on UN Security Council lists, the two lists of Terrorist Entities and Terrorists, and lists issued by final judgments or by decisions issued by the Public Prosecutor or the Illicit Gain Administration or the Committee for Procedures of Preservation, Seizure, Administration, and Expenditure of Funds of Terrorist Groups and Terrorists, or any decisions issued by regulatory authorities in the State, and those entities must verify the ability of those systems applied to detect cases of matching some cases such as: Name, ID card number, Nationality, Date of Birth, and other information. The following should be considered regarding this system:

(a) Identifying persons and entities whose names are listed on relevant UN Security Council lists and the two lists of Terrorist Entities and Terrorists and lists issued by the Public Prosecutor.

(b) Immediate renewal, without prior notice, of all funds, papers, financial instruments, or other assets owned by these persons and entities.

(c) The necessity to refer to the Negative Lists when entering into a new business relationship with any natural or legal person and following the due diligence procedures issued by the Unit, to verify the extent of their inclusion on these lists, as well as comparing all parties of any transaction with those lists, which includes; opening an account or concluding a contract to obtain financing or insurance policies or concluding any contracts to obtain any non-banking financial services, etc., according to the nature of work of each entity, before executing these transactions.

(d) Immediate update of information related to relevant UN Security Council lists and the two lists of Terrorist Entities and Terrorists and any amendments thereto upon receipt.

- 6 - Monitor any changes that may occur in the Negative Lists on a daily basis, and immediately update the entity's systems and internal programs according to those changes, as well as any updates sent by the Authority in this regard.

- 7 - Not dealing directly or indirectly with any natural or legal person from the names listed on the lists, which includes; existing customers, new customers, occasional customers, beneficial owners, and all parties related to any transaction.

- 8 - Commitment to freeze funds, papers, financial instruments, or other assets if their form (accounts, deposits, insurance policies, etc.) belonging to persons and entities listed on the lists immediately without delay. The freeze must include the following:

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# Head of the Authority

(a) All funds, papers, financial instruments, or other assets owned or controlled by the named person or entity, and not only those that can be restricted to use for a specific terrorist act, conspiracy, or threat.

(b) Funds, papers, financial instruments, or other assets owned by the named persons or entities, wholly or jointly with others, or controlled by them, directly or indirectly.

(c) Funds, papers, financial instruments, or other assets acquired from or arising from funds or other assets owned by the named persons or entities or controlled by them directly or indirectly.

(d) Funds, papers, financial instruments, or other assets belonging to persons and entities acting on behalf of the named persons or entities or acting under their direction.

- 9 - Refraining from making any funds, papers, financial instruments, or other assets or economic resources or financial services or any other services related available, directly or indirectly, for the benefit of persons and entities listed on the Negative Lists and for the benefit of entities owned by these persons or entities listed or controlled by them directly or indirectly, as well as for the benefit of persons and entities acting on behalf of the listed persons or entities or acting under their direction.

- 10 - Continuing to add any interest or other profits, revenues, or payments due on frozen accounts, provided they remain frozen.

- 11 - Implementing notifications received by entities addressed by this Decision from regulatory authorities in the State regarding frozen funds and other assets concerning exemptions immediately without delay, which includes decisions regarding requests for basic expenditure disbursement or exceptional expenditure disbursement.

- 12 - Notifying the Unit of any funds or other assets that have been frozen or unfrozen, immediately upon taking such action, as well as any measures taken to comply with freeze or unfreeze requirements, including transactions attempted to be carried out by sending an email to (Emlcu@mlcu.org.eg), as well as notifying the Authority by sending an email to (AMLCD@fra.gov.eg).

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**Smart Village, Building 136, Giza, Egypt**  
**Postal Code: 110**  
**Tel: +202 35345300**  
**Fax: +202 35370036**  
**WWW.FRA.GOV.EG**

*Building Bridges not Walls*  
*نبني الجسور لا الحواجز* (We build bridges, not walls)