Chapter Three: Special Rules Governing Financial Inclusion

With reference to the efforts made to support and stimulate the banking sector to develop products and services targeting the inclusion of a larger base of citizens, companies, and micro-enterprises in the formal financial system, in order to consolidate financial inclusion, and in light of the international recommendations adopted regarding the application of a risk-based approach in applying customer identification rules, which are considered one of the obstacles preventing segments of society from dealing with the banking sector.

It has become clear of the importance of simplifying those rules in addition to anti-money laundering and counter-terrorist financing requirements for the targeted categories, to be done within the framework of designing low-risk banking products and services with certain specifications, subject to a regulatory framework. Accordingly, the following supervisory instructions were issued:

1. Rules Governing the Classification of Financial Inclusion Products and Services, pursuant to the approval of the Board of Directors of the Central Bank of Egypt in its meeting held on July 10, 2019.
2. Due Diligence Procedures for Customers of Financial Inclusion Products and Services, pursuant to the approval of the Board of Trustees of the Anti-Money Laundering and Counter-Terrorist Financing Unit on November 11, 2018, and subsequent amendments, including the Interpretive Memo issued by the Central Bank in cooperation with the Anti-Money Laundering and Counter-Terrorist Financing Unit regarding the application of due diligence procedures for customers of financial inclusion products and services and the rules governing them (hereinafter referred to as the Simplified Procedures).

Note 1: Letter from the Governor of the Central Bank dated July 17, 2019. Note 2: Interpretive Memo regarding the application of due diligence procedures for customers of financial inclusion products and services and the rules governing them, dated March 24, 2021.

First: Definition of a Financial Inclusion Product or Service

A product or service designed to allow the inclusion of citizens in the formal financial system at a reasonable cost and in a fair manner, as well as traditional bank accounts (current or savings, including savings accounts, deposits, and certificates), provided that high-risk customers are not classified. This refers to accounts that do not involve the use of a new product launched for the first time by the bank, or the use of a new technological means for the first time to provide new or existing products. Banks must obtain approval from both the Central Bank of Egypt and the Anti-Money Laundering and Counter-Terrorist Financing Unit in case of designing products or services that rely solely on modern financial technology.

Note 3: Letter from the Governor dated October 5, 2020.

Second: Beneficiaries of the Application of the Rules

1. Natural Person Customers who have been classified by banks as low-risk customers.
2. Customers from companies and micro-enterprises – according to the definition issued by the Central Bank in this regard – which have documents or a headquarters, or are verified using any other means.
3. Companies and micro-enterprises, or self-employed professionals and artisans which do not have any of the aforementioned mentioned in item (2), and who conduct an economic activity.

It has been emphasized that in the event that banks reclassify these customers to a higher risk level or for any reason remove them from this scope, the customer identification procedures issued by the Anti-Money Laundering and Counter-Terrorist Financing Unit apply. The Interpretive Memo addressed the latter in February 2020 and any amendments thereto.

The cases in which the transition is made from applying the simplified procedures to applying the standard procedures are as follows:

a. Execution of a transaction that leads to exceeding the maximum limits prescribed for dealing with the account.

Also, according to the periodicity and procedures applied by the bank on customers classified as "low" risk for money laundering and terrorist financing, unless the examination of the mentioned transaction results in raising the customer's classification to "medium" or "high" risk. In this case, the bank must update the customer's data and documents, in addition to applying the rest of the due diligence procedures applicable to the bank's periodicity and procedures for the new customer classification category.

Note 3: Letter from the Governor dated October 5, 2020.

b. Occurrence of any changes that lead the bank to change the customer's classification regarding money laundering and terrorist financing risk degree to "medium" or "high".

Third: Maximum Limits for Financial Inclusion Transactions

1. The maximum daily and monthly limits for dealing with Financial Inclusion accounts (transactions and account balances for natural persons and legal persons from companies and micro-enterprises) must be set to provide more flexibility in dealing with these accounts as follows:

   1-1 For Natural Persons (Individuals): a. Maximum account balance: Determined by the bank. b. Maximum daily limit: 60,000 EGP.
   c. Maximum monthly limit: 200,000 EGP.

   2-1 For Companies and Micro-enterprises that have documents or a headquarters, or are verified using any other means (Category A): a. Maximum account balance: Determined by the bank. b. Maximum daily limit: 80,000 EGP.
   c. Maximum monthly limit: 400,000 EGP.

   3-1 For Companies and Micro-enterprises, or self-employed professionals and artisans who do not have documents, a headquarters, or the possibility of verification using any other means, and conduct an economic activity, and are registered under the name "Economic Activity" (Category B): a. Maximum account balance: Determined by the bank. b. Maximum daily limit: 60,000 EGP.
   c. Maximum monthly limit: 200,000 EGP.

Note 4: Letter from the Governor of the Central Bank of Egypt dated October 5, 2020. Note 5: According to Category (A) of legal persons for the definition issued in the Third Edition of the Rules Governing the Provision of Payment Services using Mobile Phones. Note 6: For the definition issued in the Third Edition of the Rules Governing the Provision of Payment Services using Mobile Phones. Note 7: Category (B) of legal persons according to the Third Edition of the Rules Governing the Provision of Payment Services using Mobile Phones.

2. The due diligence procedures for bank customers issued by the Anti-Money Laundering and Counter-Terrorist Financing Unit in February 2020 shall be applied in case of exceeding the limits prescribed in the aforementioned item. The financial institutions and other entities that will participate in providing the product or service (if any) must be identified.

The maximum daily and monthly limits mentioned in Item Third apply to the total of withdrawal and/or outgoing transfer and/or any deduction and/or purchases operations. The account balance of the customer must not exceed the maximum limit determined by the bank in this regard at any time.

The Governor of the Central Bank of Egypt may amend the maximum limits mentioned above according to developments in the Egyptian market.

Note 8: Letter from the Governor of the Central Bank of Egypt dated November 15, 2023.

Fourth: Mechanism for Approving Financial Inclusion Products and Services Relying on Modern Financial Technology:

1. Banks must submit requests for issuing the product or service to the Banking Affairs Department at the Central Bank of Egypt, provided they meet the following minimum conditions:
   a. A detailed description of the product or service. b. Identification of the target customer category.
   c. Identification of the documents to be provided by customers.
   d. Identification of the expenses/currencies the customer will bear in exchange for receiving the service. e. Identification of the mechanism for providing the service or product to the customer. f. Identification of the internal control systems to be applied, including internal audit procedures, compliance, and automated systems used to rigorously monitor transactions and identify and report any unusual patterns to the competent departments. g. A summary of the money laundering and terrorist financing risk study conducted by the bank for the product or service and the proposed measures by the bank to manage these risks.

   The maximum limits for transactions and account balances for natural persons and legal persons from companies and micro-enterprises must be those mentioned in Item Third.

2. The Banking Affairs Department at the Central Bank of Egypt is responsible for the following:

   • Receiving bank requests and studying them.
   • Sending requests after approval by the concerned departments at the Central Bank of Egypt to the Anti-Money Laundering and Counter-Terrorist Financing Unit to issue an opinion.
   • Corresponding with banks to inform them of the final opinion regarding their requests.

3. Each bank prepares a quarterly report sent to the Off-Site Supervision Sector with the results achieved after issuing the products and services subject to the rules. This is done through report templates that will be sent to banks subsequently.

Other guidelines were addressed in the Interpretive Memo issued by the Central Bank of Egypt in coordination with the Anti-Money Laundering and Counter-Terrorist Financing Unit:

First: Key Facilitations in the Simplified Procedures

1. The bank may engage service providers in applying the simplified customer identification and verification procedures, to facilitate access to the largest possible segment of customers, provided that the service providers comply with the bank's procedures for customer identification and verification (acting as agents for the banks).

2. The simplified customer identification and verification procedures may be applied at the customer's location through one of the specialized employees, including bank employees and service providers.

3. The bank may update data, information, and documents obtained using electronic means, provided that the risks related to the customer are low.

4. When applying the simplified customer identification and verification procedures, the bank may rely on obtaining the information and documents contained therein without requesting any additional information or documents not included in these procedures, including not excessively demanding customers to provide documents to verify the source of funds or prove income.

Second: Clarifications on Some Provisions in the Simplified Procedures Issued by the Anti-Money Laundering and Counter-Terrorist Financing Unit

-1 For Natural Persons

1-1 If the job title on the identity document matches the information in the account opening request form, it is sufficient to rely on the identity document to verify this information without obliging the customer to provide any additional documents, information, or data.

2-1 For a customer whose identity document does not specify a profession or job (e.g., housewife, qualified but unemployed, or unemployed) that matches the information in the bank's account opening request form, this should not prevent the bank from opening the account or require the customer to provide any additional documents, information, or data.

3-1 In case of a discrepancy between the profession stated on the customer's identity document and what is recorded in the account opening request form, the accuracy of this information can be verified according to each bank's internal procedures, while facilitating these procedures using any of the following:
a. Documents specifying the customer's employer, for example: a letter from the employer, or a document issued by a government entity specifying the employer (e.g., documents issued by the General Authority for Social Insurance, or labor offices), or an ID card specifying the employer, or a professional license, or a tax card for self-employed professionals (if available). b. Information or data that the bank can obtain by various means (itself or through the service provider). For example, reliance may be placed on:
- Field inquiries, especially for customer categories such as self-employed professionals who do not have a professional license or tax card, and customers with crafts and businesses that are difficult to license or prove (e.g., masons, carpenters, electricians, plumbers, property guards, nannies, and workers in domestic service activities, and other crafts and jobs). Field inquiries may rely on the customer's surroundings or those dealing with him.
- Social media, especially for customers with pages and blogs providing services or products to the public.

4-1 In case of a discrepancy between the residence address stated on the customer's identity document and what is recorded in the account opening request form, the accuracy of this information can be verified according to each bank's internal procedures, while facilitating these procedures using any of the following: a. Documents specifying the residence address, for example: one of the utility bills (electricity, water, gas, telephone) or a ownership contract (including preliminary contracts), or a rental contract. b. Information or data that the bank can obtain by various means, including field inquiries, for example.

-2 For Companies and Micro-enterprises

1-2 In case of the availability of a commercial register or activity license: It is sufficient to obtain an official extract from the register or a certified copy of the license without obliging the customer to provide any additional documents, information, or data.

2-2 In case of the unavailability of a commercial register or activity license:

a. In the presence of a headquarters for the establishment or company to conduct its activity: The customer's activity can be verified according to each bank's internal procedures, while facilitating these procedures using documents such as: an ownership contract (including preliminary contracts), or a rental contract, or using data or information from other sources which the bank can obtain by various means (itself or through the service provider), which may include conducting a field inquiry or relying on social media.

b. In the absence of a headquarters for the establishment or company to conduct the activity: The customer's activity can be verified using data or information from other sources, which the bank can obtain by various means (itself or through the service provider), which may include conducting a field inquiry or relying on social media.

c. For companies and micro-enterprises or self-employed professionals who do not have a commercial register or professional license, and customers with crafts and businesses (e.g., craftsmen, electricians, plumbers, carpenters, etc.) that are difficult to license or prove when opening an account for their activities without a headquarters to conduct the activity, these accounts can be opened under the name "Economic Activity Account". The activity of the economic activity owner is verified through an identity document according to the previously explained in item 1 depending on the case, without obliging the customer to provide any additional information or documents, provided that they enjoy the transaction limits for natural persons stated in the rules.

Note 9: Letter from the Governor dated November 15, 2023.