Cairo on: 17 July 2019

Dear Mr. Chairman

Bank

Greetings,

With reference to the efforts made to support and stimulate the banking sector to develop products and services targeting the inclusion of the largest base of citizens, companies, and micro-enterprises in the financial system, and in light of the international recommendations adopted regarding the application of the risk-based approach to consolidating financial inclusion, which is considered one of the obstacles preventing segments of society from dealing with the banking sector.

It has become clear that it is important to simplify those rules as well as 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 specific parameters subject to supervisory frameworks. Accordingly, the following supervisory instructions were issued:

1. The 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 at its meeting held on 10 July 2019 (attached).

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 11 November 2018 (attached).

Please be kind enough to take note and alert to take the necessary action to implement the referred procedures and rules effective from their date.

Accept our highest respect,

Tarek Amer

Rules Governing the Classification of Financial Inclusion Products and Services

First: Definition of a Financial Inclusion Product or Service

A product or service designed to allow citizens to integrate into the formal financial system at a reasonable cost and in a fair manner. This requires banks to obtain approval from both the Central Bank of Egypt and the Anti-Money Laundering and Counter-Terrorist Financing Unit to offer this product or service.

Second: Beneficiary of a Financial Inclusion Product or Service

Customers from companies and micro-enterprises (according to the definition issued by the Central Bank in this regard) or customers who are natural persons, who have been classified by banks as low-risk customers. It is necessary to emphasize that if banks reclassify these customers to a higher risk level or they exit this scope for any reason, the customer identification procedures issued by the Anti-Money Laundering and Counter-Terrorist Financing Unit in April 2011 and any amendments thereto shall apply.

Third: Mechanism for Approving Financial Inclusion Products and Services:

1. Banks must submit requests for issuing financial inclusion products and services to the Banking Affairs Department at the Central Bank of Egypt, ensuring 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/commissions 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 and compliance procedures and the automated systems used to tightly monitor transactions and identify and report any unusual patterns to the relevant departments.

g. Presentation of a summary of the bank's money laundering and terrorist financing risk assessment study for the product or service and the proposed measures by the bank to manage these risks.

h. The maximum transaction limits for the service or product shall be as follows:

I. The maximum account balance is 20,000 Egyptian Pounds.

II. The maximum single transaction amount is 12,000 Egyptian Pounds.

III. The maximum daily aggregate for a single customer's transactions at the bank is 12,000 Egyptian Pounds.

IV. The maximum aggregate for an individual's transactions during the month is 100,000 Egyptian Pounds, and the maximum aggregate for companies and micro-enterprises during the month is 200,000 Egyptian Pounds.

Any of the limits mentioned above may be changed upon the bank's request, after approval by the Anti-Money Laundering and Counter-Terrorist Financing Unit.

i. Identification of the financial institutions and other parties that will participate in providing the product or service (if any).

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

• Receiving and studying bank requests.

• Sending requests, after approval by the relevant departments at the Central Bank of Egypt, to the Anti-Money Laundering and Counter-Terrorist Financing Unit to express its opinion on them.

• Notifying banks of the final opinion regarding their requests.

3. Each bank prepares a quarterly report sent to the Office Supervision Sector regarding the achieved results after issuing financial inclusion products and services, through report forms to be sent to banks subsequently.

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1 Due diligence procedures for customers of financial inclusion products and services

November 2018 Issue

Table of Contents

Item	Description
1 -	Definitions
2 -	Scope of application of these procedures
3 -	Reliance on the service provider for customer identification and verification
4 -	Customer acceptance policy
5 -	Customer identification and verification
5.1	General provisions
5.2	Customer identification and verification procedures for natural person customers
5.3	Customer identification and verification procedures for company and micro-enterprise customers
6 -	Updating the cards
7 -	Continuous supervision of operations
8 -	Risk management systems for money laundering and terrorist financing
8.1	Risk reporting
8.2	Limiting risks
9 -	Special rules for transfers
9.1	In the case of sending local transfers
9.2	In the case of receiving local or external transfers
9.3	In the case that the bank is an intermediary in the chain

Introduction

The Anti-Money Laundering Law issued by Law No. 80 of 2002 defined in paragraph (c) of Article (1) the financial institutions to which its provisions apply, including banks operating in the Arab Republic of Egypt and their branches abroad, and branches of foreign banks operating in the Arab Republic of Egypt. It imposed on these institutions specific obligations in Articles (8) and (9), the first of which is the application of customer due diligence procedures and other rules and procedures related to combating money laundering and terrorist financing issued by the Unit. The executive regulation of the aforementioned law issued by Prime Minister's Council Resolution No. 951 of 2003 and its amendments, in Article (3), defines the competencies of the Unit, including setting these rules and procedures and verifying with supervisory authorities that financial institutions comply with them.

These procedures come within the framework of the Anti-Money Laundering and Counter-Terrorist Financing Unit's keenness to keep pace with all global developments, especially those related to financial inclusion requirements and working to ensure that anti-money laundering and counter-terrorist financing requirements do not hinder its objectives. In light of the Egyptian state's direction to support financial inclusion and reduce reliance on cash, and in line with the initiative of the President of the Arab Republic of Egypt to establish the National Payments Council, and the Central Bank of Egypt's initiatives to launch low-risk banking products and services subject to supervisory frameworks that oblige banks to put effective systems and procedures in place to monitor transactions, these procedures were prepared in light of the risk-based approach adopted by the Financial Action Task Force (FATF). This approach allows for the application of simplified procedures in cases where money laundering and terrorist financing risks are low. The application of these procedures to customers of financial inclusion products and services is conditional upon obtaining approval from the Unit, represented by its Chairman. The aforementioned approval may impose restrictions on how these procedures are used or allow broader areas for their use according to the nature of the financial inclusion product or service for which the approval was issued.

In application of the provisions of the Anti-Money Laundering Law and its executive regulation mentioned above, all banks operating in the Arab Republic of Egypt, and all their branches and subsidiaries domestically and abroad, as well as all branches of foreign banks operating in the Arab Republic of Egypt, must comply with the provisions of these procedures, observe them, and implement them with precision when offering financial inclusion support products or services that have obtained the Unit's written approval in this regard, thereby achieving the objectives mentioned in the field of combating money laundering and terrorist financing.

Definitions

Financial Inclusion Product or Service: A product or service designed to allow citizens to integrate into the formal financial system at a reasonable cost and in a fair manner.

Beneficiary: Customers from companies and micro-enterprises (according to the Central Bank of Egypt's definition at the date of issuing these procedures, meaning companies and micro-enterprises whose annual sales or annual revenue volume is less than 1 million Egyptian Pounds, or whose paid-up capital is less than 50,000 Egyptian Pounds for companies and micro-enterprises that have not been in operation for a year).

Competent Employee: The employee responsible for applying "Customer Identification and Verification" procedures in the cases stipulated in these procedures, whether at the bank or at the service provider.

Negative Lists: Include lists of terrorist entities and terrorists organized under Law No. 8 of 2010, and lists issued by the United Nations Security Council related to terrorist financing and the financing of the proliferation of weapons of mass destruction, and any other lists prepared by the bank or deemed necessary to refer to.

Freezing of Funds: The temporary ban on transferring, moving, exchanging, or disposing of funds.

2 - Scope of Application of These Procedures

2.1 These procedures apply to customers of a financial inclusion product or service pursuant to an approval issued by the Unit, provided that the conditions for providing the product or service for which the Unit's approval was issued are attached to the approval.

The anti-money laundering and counter-terrorist financing controls issued by the Central Bank of Egypt and its amendments also apply to customers of a financial inclusion product or service. Furthermore, the customer due diligence procedures for bank customers apply to service customers in matters not regulated by these procedures, in a manner consistent with the nature of the product or service.

These procedures apply only to customers and beneficial owners seeking financial inclusion products and services who have not previously been identified by the bank under customer due diligence procedures for bank customers, whether these customers are natural persons or "companies and micro-enterprises" of any of these companies or establishments.

These procedures do not apply to customers of any other products or services offered by the bank unless approved by the Unit.

3 - Reliance on the Service Provider for Customer Identification and Verification

3.1 A bank may rely on a service provider to apply the "Customer Identification and Verification" procedures stipulated in paragraph (c) of these procedures, in the following cases:

3.1.1 The service provider is a licensed mobile phone company authorized to operate in the Arab Republic of Egypt under Telecommunications Law No. 10 of 2003 from the competent authority, whether the service is provided through one of its branches or fixed or mobile outlets, provided that "Customer Identification and Verification" procedures are applied by one of the company's employees.

3.1.2 The service provider is one of the post offices belonging to the National Post Authority, provided that "Customer Identification and Verification" procedures are applied by one of the employees of the aforementioned authority.

3.1.3 The service provider is the Small and Medium Enterprises Development Agency, provided that "Customer Identification and Verification" procedures are applied by one of the employees of the department responsible for this pursuant to a decision by the Executive Chairman of the Agency.

3.1.4 The service provider is an association or non-governmental organization licensed to practice its activity by the Ministry of Social Solidarity, or a company, association, or non-governmental organization licensed to practice microfinance activity by the Financial Regulatory Authority in accordance with the provisions of Law No. 141 of 2014 and the decisions issued in implementation thereof, provided that the following are available:

3.1.4.1 The entity has an approved articles of association in the case of associations and non-governmental organizations, or a valid commercial register and valid tax card in the case of companies.

3.1.4.2 Obtaining approval that the entity is a service provider from the Financial Regulatory Authority in the case of companies, associations, or non-governmental organizations licensed to practice microfinance activity by the Financial Regulatory Authority.

3.1.4.3 Obtaining approval that the entity is a service provider from the Ministry of Social Solidarity in the case of associations or non-governmental organizations to which the previous paragraph does not apply.

3.1.5 The service provider is the Ministry of Social Solidarity, provided that "Customer Identification and Verification" procedures are applied by one of the employees of the department responsible for this pursuant to a decision by the Minister of Social Solidarity.

3.1.6 The service provider is another entity other than those mentioned in the previous paragraphs, provided that the following are available:

3.1.6.1 The entity has a valid commercial register and a valid tax card.

3.1.6.2 In the case where the entity provides the service through an outlet belonging to it in another location, the other entity must have a valid commercial register and a valid tax card.

3.1.6.3 The bank subjects the owners of the entity and those in senior management to customer due diligence procedures for bank customers, and collects any information it deems necessary to obtain regarding them.

3.1.6.4 The bank verifies that none of the owners of the entity or those in charge of its management have been subject to penalties related to felonies or penalties for crimes involving moral turpitude or dishonesty.

3.1.6.5 The contract terms with the entity must include the necessity of having systems and procedures that require high levels of competence and integrity among employees and outlets belonging to them, and these systems and procedures must include, as a minimum, inquiry about previous work and obtaining a criminal record certificate.

3.2 In all the previous cases, the following rules must be applied:

3.2.1 The service provider applies the procedures stipulated in paragraph (c) of these procedures as an agent for the bank in applying them. The bank must exercise special care to verify that the service provider identifies and verifies customer identities in accordance with the procedures that the bank itself applies. In all cases, the bank is fully responsible for the integrity and effectiveness of the application of these procedures.

3.2.2 The bank must put in place appropriate procedures to periodically verify the service provider's compliance with all "Customer Identification and Verification" procedures. In the event of major or repeated violations in this regard (according to standards set by the bank), the bank must consider the suitability of continuing to rely on the service provider to apply "Customer Identification and Verification" procedures.

3.2.3 The contract signed by the bank with the service provider must include the commitments and responsibilities of each party regarding the application of "Customer Identification and Verification" procedures, including the service provider's commitment to allow inspectors from the Central Bank of Egypt to visit service provision locations to verify the integrity and effectiveness of the application of these procedures.

3.2.4 The bank must comply with paragraph 2/1/1/2 of the instructions issued by the Central Bank of Egypt in September 2014 regarding the development of internal control systems in banks. It must also verify that employees at branches and outlets belonging to the service provider have received the necessary training to perform "Customer Identification and Verification" procedures.

3.3 The service provider must send the bank all documents related to opening the service account for the customer within a maximum of 10 working days from the date of completing the account opening documents. The account may be opened during this period, provided the bank applies the necessary procedures to manage money laundering and terrorist financing risks, including setting limits on the number, value, and type of transactions the customer can perform. In the event of non-compliance with sending all documents within the specified period, the account is suspended. However, in all cases, the account is not opened until the bank verifies whether the customer is included on the negative lists.

4 - Customer Acceptance Policy

4.1 The bank must put in place clear policies and procedures for accepting customers of financial inclusion products or services that achieve national objectives related thereto. These must also include determining circumstances under which the bank may not accept a new business relationship or may require terminating an existing relationship due to exposure to unacceptable levels of money laundering or terrorist financing risks, including discovering that the customer is included on any of the negative lists, and considering sending a suspicion report to the Unit according to the reasons for terminating the business relationship.

4.2 The policies and procedures mentioned must also specifically identify categories of financial inclusion product or service customers who may pose a greater risk to the bank, and consider applying what is stipulated in paragraph (c) of these procedures regarding them.

5 - Customer Identification and Verification

5.1 General Provisions:

5.1.1 The application of these procedures is limited to a financial inclusion product or service customer only if their money laundering and terrorist financing risks are low, guided by the risk areas stipulated in paragraph seven of the customer due diligence procedures for bank customers. The bank is responsible for managing money laundering and terrorist financing risks related to providing financial inclusion products or services, including, if necessary, obtaining any additional information or documents not included in these procedures or applying "customer due diligence procedures for bank customers" to customers of a financial inclusion product or service, according to the risks the bank assesses for each customer individually.

5.1.2 The bank must not open accounts for financial inclusion products or services for persons of unknown identity, or under names that are obviously fictitious.

5.1.3 "Customer Identification and Verification" procedures must be conducted using original documents or information or data from reliable and independent sources.

5.1.4 If a person is authorized to act on behalf of a customer, this person must be authorized to do so, and "Identification and Verification" procedures must be applied to this person in accordance with what is stipulated in paragraph (2,5) of these procedures.

5.1.5 The bank must identify the beneficial owner and take reasonable measures to verify their identity using information or data from reliable and independent sources, ensuring the bank is convinced that it has identified that beneficial owner. The bank may verify the beneficial owner's identity after the start of the business relationship under the following conditions:

5.1.5.1 This must be done as soon as possible.

5.1.5.2 This must be necessary so as not to disrupt the normal course of business.

5.1.5.3 Money laundering and terrorist financing risks have been effectively managed.

5.1.6 In the case of customers from companies or micro-enterprises, their ownership and control structure must be considered, and their beneficial owners identified. "Identification and Verification of the Beneficial Owner" procedures must include:

5.1.6.1 Natural persons who have a controlling ownership stake in the company or establishment (if any).

5.1.6.2 Natural persons who do not have a controlling ownership stake in the company or establishment but exercise control over it through any other means (if any).

5.1.6.3 The natural person responsible for the effective management of the company or establishment, in the case of not reaching persons who fall under paragraphs (a) and (b).

5.1.7 The bank must ensure that the data in the application form for opening a financial inclusion product or service account (a unified form issued by the bank) is fully completed and signed by the customer or the person authorized to deal (in the case of companies and micro-enterprises) in front of the competent employee.

5.1.8 The bank must understand the purpose of the transaction on the account and the nature of that transaction. However, in cases where the purpose and nature of the transaction are clear to the bank, the bank may include them in the service application form without obtaining information or documents related thereto from the customer.

5.1.9 The bank must obtain accurate information regarding the customer's profession or activity (if they have a job), without accepting vague expressions that do not clarify that profession or activity.

5.1.10 "Identification and Verification" procedures may be taken at the customer's location through one of the employees specialized in taking these procedures.

5.1.11 In the event that the bank is unable to fulfill the customer identification or verification procedures as stipulated in these procedures, it must not open a financial inclusion product or service account and consider sending a suspicion report regarding the customer to the Unit according to the reasons for not fulfilling those procedures.

5.1.12 The bank must fulfill its obligations stipulated in the executive regulation of the Anti-Money Laundering Law regarding the implementation of United Nations Security Council resolutions related to terrorist financing and the proliferation of weapons of mass destruction, as well as the procedures and mechanisms issued by the Unit and the Central Bank of Egypt in this regard. This includes what results from discovering that the customer is included on any of the negative lists before approving the opening of a financial inclusion product or service account; with consideration for re-verifying upon any update to those lists, and taking the necessary measures to freeze funds in accordance with the provisions of laws, regulations, procedures, and mechanisms related thereto, especially what is stipulated in Article (52) of the executive regulation of the Anti-Money Laundering Law.

5.2 Customer Identification and Verification Procedures for Natural Person Customers

5.2.1 Obtaining the Necessary Information for Identification The bank must identify the customer's identity by obtaining the following information as a minimum before opening the service account:

• Date and place of birth.

• Gender (Male/Female).

• Current permanent residence.

• Mobile phone number (if available).

• Landline phone number (if available).

• Profession or job (if the customer has a job).

• Employer and work address (if the customer has a job).

• National ID number for Egyptians.

• Passport number or travel document for non-Egyptians.

5.2.2 Verification Procedures 5.2.2.1 The bank must, before opening a financial inclusion product or service account, review the customer's National ID card, passport, or travel document to verify the accuracy of the data and information obtained, including the National ID number, and obtain a photocopy of the aforementioned document, with the competent employee signing it to indicate that it is a true copy of the original. In all cases, it must be ensured that the document is valid and not accepted if there are obvious signs of tampering. The bank does not open the product or service account until the above is obtained.

5.2.2.2 In the event that the customer's identity document does not include their permanent residence or profession (if they have a job), or if there is a discrepancy between either of them and what is recorded in the application form for opening the product or service account, it is necessary to verify the accuracy of this information using original documents or information or data from reliable and independent sources. This may be done after opening the financial inclusion product or service account, according to the conditions stipulated in paragraph (5.1.5), provided that limits are placed on the number, value, and type of transactions that can be performed until the aforementioned documents, information, or data are completed.

5.3 Customer Identification and Verification Procedures for Company and Micro-Enterprise Customers

5.3.1 Obtaining the Necessary Information for Identification The bank must obtain the following information as a minimum before opening the service account:

• Name (Trade Name).

• Legal Form.

• Nature of Activity.

• Head Office Address.

• Landline phone number (if available).

• Registration number, date, and authority in the Commercial Register, or registration number, date, and authority of the license required to practice the activity issued by a government authority for entities for which commercial registers are not issued.

• Name and address of the establishment owner (in the case of establishments).

• Names and addresses of partners who have an ownership stake exceeding 25% of the capital. In the event that no partner has this percentage, the same data must be obtained for the partner with the largest ownership stake. In the event that all ownership stakes are equal, the data mentioned must be obtained for the partner whom the bank estimates (according to standards it sets) exercises control over the company or establishment by any other means (if any).

• Names and addresses of the person or persons responsible for the actual management of the company or establishment.

5.3.2 Verification Procedures 5.3.2.1 The bank must verify the documents indicating the delegation from the company or establishment to the natural person or persons who hold it.

5.3.2.2 The bank must, before opening the service account, obtain an official extract from the customer's Commercial Register issued within a period not exceeding three months from the date of opening the account, or a copy of the license required to practice the activity issued by a government authority for entities for which commercial registers are not issued, as well as an identity document for the establishment owner or the partners mentioned in paragraph (5.1.1), and those authorized to sign on behalf of the establishment or company. The bank may also obtain additional documents from the customer (such as the tax card or articles of association or other relevant documents) according to the bank's assessment of the risk size associated with the customer. In all cases, it must be ensured that the aforementioned documents are valid and none of them are accepted if there are obvious signs of tampering.

5.3.2.3 The bank must verify the accuracy of the information available about the customer, using documents or data...

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