Survey started through the ( Covid 19 ) pandemic until the end of 2021 found that 72& of Egyptians are shopping more online since the onset of the pandemic, and 57% have started using banking online.

E-Commerce growth has shown the globe the online market stability, and the Digital Bank will offer customers access to banking services via cell phones, desktops, and all other internet-enabled devices.

Demanding more efficient ways to access banking records and complete financial transactions at home or work is one of the main reasons for increasing consumer’s demand for digital banking services and this has given rise to numerous technological advancement within the financial institutions that are using artificial intelligence ( AI ) .

Consumer preferences are changing, all started when there has been a competition from FinTech start-ups, and regulations like the European Union’s revision of the Payment Services Directive ( PSD2 ) ” ( a piece of legislation designed to force provider of payment services to improve customer authentication processes and to also bring in new regulation around third-party involvement. ) ” that forced banks in Europe , the Middle East, and Africa ( EMEA ) to evolve their digital capabilities.

Egypt’s companies such as Misr Digital Innovation ( MDI ) ” ( established in 2020 to launch the first digital bank in Egypt in line with the Central Bank of Egypt (CBE) rules and regulations ) ” having a partnership with one of the global technology leaders ( Mastercard ) to start providing the state with an easy, smooth, and secure banking experience as part of Egypt’s digital transformation journey. 

What is digital banking & digital banking services?

Digital banking is the digitization of each and every level of banking relying on artificial intelligence to automate back-end operations.

Administrative tasks and data processing that puts pressure on employees to complete its day-to-day tasks will be solved by the Digital Bank artificial intelligence and also allowing users to make account deposits and transfer amounts remotely. Nonetheless, it makes it easier to apply for loans and access personalized money management services. 

Digital banks are different from online banking which is often used to refer to a service provided by traditional banking institutions that can only allow their customers to conduct financial transactions over the internet. However, digital banks in Egypt can still conduct the same type of business the other traditional banks provide, the difference is that the digital banks work up to deliver their services through the internet primarily, as they heavily rely on digital technology, network connectivity and advanced data capabilities. 

Why is Egypt aiming to digitize banking operations ?

President of the Arab Republic of Egypt Abdel-Fattah El-Sisi adopted the National Strategy for Payments which digital banking is part of.

The Central Bank of Egypt ( CBE ) is planning to expand the establishment of digital banks to make all digital services available 24/7 to improve the banking and financial services in the country.

Financial technology helped banks to implement more than one billion digital transactions worth approximately 2.8 trillion EGP, which led the  CBE to direct all banks to expand their digital services, a fund worth 1.3 billion EGP to support innovation has already been launched, with contribution of commercial banks ( Banque Misr , Banque du Caire and National Bank of Egypt ).

Goals of the National Payments Council ( NPC ), which is chaired by President El-Sisi, teaming up with CBE to digitize all financial services as technology has become a major part of citizens daily life and the banking sector must be well aware of its importance to assist in achieving a quantum leap in financial services and to reduce reliance on banknotes.

What are the characteristics of the new banking Law?

Abolishing Law 88 of 2003, President El-Sisi ratified the new banking Law 194 of 2020 and was published in the Official Gazette on September 15/2020 and became effective as of September 16/2020.

The new Law aims to stabilize the banking and monetary sectors and to improve the performance of the banking sector. However, it still keeps the best practices, international customs and legal framework of corresponding foreign supervisory authorities.

The Central Bank of Egypt has the absolute powers and authorities to supervise and regulate the banking sector in the state and this won’t be reached without ensuring the independence of the CBE.  

The new banking Law 194 of 2020 allows the CBE further powers than the abolished Law 88 of 2003 and adding powers which are ” protection of client’s rights and settling related disputes, Settlement of status for distressed banks, and the protection and consolidation of competition and prohibition of monopolistic practices ” as per the Article 7, of the Law 194 of 2020.

The Governor of the CBE enjoys a term of 4 years and can only be renewed once, all the main executives ( Chairman of the board, board members, and executive managers ) in the country’s banks must be approved by the Governor of the CBE as provided by Article 120, of the new banking Law. Nonetheless, managers of foreign bank branches and their deputies also must receive an approval from the Governor. Article 68, of the Law 194 of 2020.

General assemblies of banks may not convene without the CBE comments on the auditor’s report, and the authority to order measures such as a capital increase or increasing relevant reserves prior to dividends distribution.

Minimum paid-up capital for local banks increased to 5 billion EGP and 150 million USD or equivalent in any other foreign currency for branches of foreign banks.

Bankruptcy Law 11 for 2018 is no longer active and the banking Law 194 of 2020 introduced a chapter that regulates banks in financial distress which authorizes the CBE to declare a bank to be in financial distress by a decree valid for one year from it publishing date or the notification date of relevant parties, which can be renewed for two more similar period that will make it a maximum of three years from the issuance date of the decree.

Conclusion

The issuance of the new Banking Law had a positive reaction in the market. The developing and supporting competitive capabilities and the aim to raise the level of the Egyptian banking sector’s performance to qualify it for global competition. Further, the International Monetary Fund ( IMF ) viewed the new Banking Law as a step towards strengthening the legal framework for the banking sector in Egypt and the CBE.

Individuals could be asking why should we lose that personal touch, that rapport that humanizes banking and brings clarity to one’s financial decisions. However, the technology development doesn’t look like it’s going to stop soon and the reality is that we have already made that transition from the traditional to Digital banking without even realizing it.

Digital Banking is the financial sector’s future while the business outlook is E-Commerce. In that case, digitalizing both the banking and business sector is crucial because if we take a closer look we’ll see that they’re both connected. We can’t purchase something whether online or in stores without using digital banking using the E-Signature. In addition, where are we going to use digital banking if E-Commerce doesn’t exist? That’s why developing both sectors is highly important in the new technological era. In order to follow these new developments, we mustn’t forget the importance of also developing our laws in lieu of these developments in order to protect our consumers’ privacy and money against any sort of hacking, scamming, and fraud transactions. According to the traditions of our ancestors, any transaction goes both ways, consumers use our services while we provide them with comfort and protection of their rights. 

Due to the need of the market in Egypt for Digital Banking, the CBE has already started moving towards improving this sector and pushing all the banks to start developing their infrastructure.

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Money laundering affects the economic, social and political conditions in Egypt and on inflation and increasing the general level of prices, and weakening the stability of the foreign exchange market, exploits the money laundered to finance terrorism, which led to the failure to create real jobs, which led to the inflation of the problem high unemployment, low wages of the workforce and low standard of living, forced the Egyptian government to intervene to pass the new law No. (17) for 2020 amending the anti-money laundering law No. 80 of 2002.

What does money laundering mean?

The perpetrator of the offence of money laundering is anyone who knows that funds or assets are derived from an original crime and deliberately transfers or transfers proceeds, with the intention of concealing, disguising, concealing, concealing, managing, preserving, changing the truth of funds or assets from an original crime, or deliberately preventing the discovery or obstruction of the original perpetrator. – Acquiring, possessing, using, managing, managing, preserving, replacing, depositing, securing, investing or investing in the original offence. Manipulating its value, concealing or disguising the true nature of it, its source, location, how it is disposed of, moved, owned or related rights.

Stages:

Money laundering is carried out through three stages: deposit, camouflage and merger.

New amended sanctions:

The new amendments tightened sanctions to achieve deterrence, and here are the new tough sanctions:

 Article 14:

A penalty of up to seven years’ imprisonment and a fine equivalent to the same amount of money in question shall be imposed on anyone who commits or proceeds to commit the crime of money-laundering under article (2) of this Act.

This offence is excluded from the application of the provisions of article 32 of the  Penal Code.

Article (14 bis):

The confiscation of seized funds or assets resulting from the offence of money laundering or the original offence shall be confiscated when the provision of the article (2) of this Act is violated, and the confiscation includes:

• Money or assets laundered.
• Receipts, including income or other benefits from these receipts.

If the receipts are mixed with funds acquired from legitimate sources, they are confiscated equivalent to the estimated value of them or to the media used or prepared for use in money-laundering or original crimes.

An additional fine equivalent to the value of funds or assets is imposed if they cannot be seized or if they are disposed of in good faith.

Article 14 bis – 1):

Anyone who violates any of the provisions of article 12 of this Act shall be sentenced to a maximum of three months’ imprisonment and a fine of not less than the amount of money in question.

In any case, the amounts and objects in question are controlled and confiscated, if you do not set a fine equal to their value.

What are these modifications?

(Article 1)

Replaces by the definition of funds contained in article (1/section A), and articles (14,16  bis) of the Anti-Money Laundering Act of Law No. 80 of 2002 provide the  following texts:

Article (1/panda):

• Funds or assets:

All physical and virtual assets and economic resources, including oil, other natural resources, property, national or foreign currencies, securities or commercial, whatever their value, type or means of obtaining them, whether physical or moral, transferred or fixed, documents, legal instruments, documents, instruments, instruments and editors installed for all of the above, whatever their form, including digital or electronic form, and all rights relating to any of them, including bank credit, tourism networks, banking networks, documentary credits and any  Returns, profits or other sources of income generated or generated from these funds, assets, or any other assets prepared for use for financing, products or services, include virtual assets with digital value that can be traded, transferred or digitally transferred and can be used as a payment or investment tool.

Article (16 bis):

Without violating the provisions of the laws governing the work of financial institutions, professionals and non-financial businesses, the supervisory authorities referred to in article (7) of this Law may take action against the institutions and entities of their supervisory authority when violating the provisions of this law, decisions, mechanisms, rules or controls issued in its implementation, any of the following procedures:

• It’s a punishment justification.
• The obligation to remove the violation and take corrective action within a specified period.
• Prevent, suspend, restrict or suspend business for a period of not more than one year.

The executive regulations of this act define the controls and procedures for implementing this.

(Article II)

The term “funds or assets” is replaced by the word “money” wherever it is contained in the aforementioned Anti-Money Laundering Act, and the word “immediately” is replaced by the words “urgently” in the first paragraph of article (8) of the same law.

Article (1/item/e):

Anti-money laundering and related original crimes or terrorist financing as defined by the executive regulations of this law.

Article (9 bis):

All parties are committed to maintaining comprehensive statistics that ensure the effectiveness and efficiency of anti-money laundering and terrorist financing systems, all as defined by the executive regulations of this law.

Article (17 bis):

Without prejudice to the rights of others of good faith, the Attorney General and the Military Prosecutor may, as the circumstances may, at the request of the Chairman of the Board of Trustees of the Unit, if necessary or urgently order the imposition of protective measures including freezing or detention, with a view to preventing the disposal of funds or assets related to money laundering offences and related original crimes or financing of terrorism.

The issuance of the measures referred to in the first paragraph of this article, and the grievance of them, follow the provisions of articles from 208 bis (a) to 208 bis (e) of the Code of Criminal Procedure.

Article (18 bis):

At the request of counterparts in other countries, the authorities are obliged to provide as much international cooperation as possible to combat money laundering and related original crimes or terrorist financing, in a manner that does not conflict with the fundamental principles of the state’s legal system and ensures that such cooperation is kept confidential.

Article (18 bis-1):

The authorities use only the information obtained through judicial cooperation in the area of money-laundering offences and related original crimes or terrorist financing for the purpose for which they were requested, unless they have obtained prior authorization from the foreign counterpart authority provided by the information, and in the latter case must benefit the authority with which they cooperated in a timely manner using the information they have obtained and the implications as determined by the executive. For this law.

Article (18 bis-2):

Requests for mutual legal assistance may not be rejected on the basis of binding confidentiality provisions of financial institutions, or simply because the offence involves tax matters, in contravention of the fundamental principles of the state’s legal system.

Article (18 bis-3):

Entities may conduct inquiries on behalf of their foreign counterparts and exchange as much information as possible from them, in a manner that does not conflict with the basic principles of the legal system in the state as defined by the executive regulations of this law.

(Article 4)

The words “original related offences” are added after the term “money laundering” contained in article (18) of the AML referred to.

(Article 5)

The fourth paragraph of article (12) of the anti-money laundering law referred to is deleted.

How will this law provide a safer atmosphere?

Providing anti-money laundering policies and procedures to help financial institutions combat money laundering by preventing criminals from engaging in transactions to hide the assets of funds associated with illegal activity, which generally helps address money laundering that will help address crimes of all kinds.

Preventing the undermining of the integrity of national economies and financial regulations.

Increased faith in democratic structures.

Conclusion:

It appears from the foregoing that the government has made a recent amendment to the Anti-Money Laundering Act to combat money laundering and terrorist financing, in a way that prevents those involved in criminal activities from exploiting the integrity and stability of the state’s financial system.

It seems excellent to form the National Committee against Money Laundering and Terrorist Financing, which develops the policy to combat money laundering and terrorist financing and develop plans for its implementation, follow up with the relevant authorities for the purposes of implementing the obligations contained in the relevant international resolutions, and to participate in international forums on combating money laundering and terrorist financing.

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