EGYPT Law and Practice Contributed by: Ibrahim Shehata, Hesham Kamel, Mohamed Abed and Hamza Shehata, Shehata & Partners Law Firm
2.5 Regulatory Sandbox There are two main regulatory sandboxes in Egypt, designed to foster innovation in the fin - tech sector. Banking Fintech Sector The sandbox for the banking fintech sector, launched by the CBE in May 2019, serves as a testing environment for fintech businesses developing new business models that face chal - lenges from stringent authorisation requirements and regulatory uncertainties. It operates as a virtual space, allowing applicants to experiment with their innovative fintech solutions within a live, relaxed regulatory environment for a limited duration and on a small scale. The primary goal of this sandbox is to integrate compliance into the fintech ecosystem at its early stages, enabling innovators to refine their offerings while safeguarding consumers and the The FRA introduced the CORBEH sandbox for the non-banking fintech sector in collaboration with the Egypt Securities Exchange. It provides a controlled environment for testing fintech appli - cations under the governance of the Fintech Law and related FRA decisions. Key features include adaptable licensing, capital flexibility, the involvement of authorised founders’ agents, compliance obligations, ongoing monitoring and reporting, and a focus on consumer protection and risk mitigation. This sandbox aims to balance innovation promo - tion and risk management by allowing fintech businesses to experiment within defined param - eters. financial system from risks. Non-Banking Fintech Sector
requiring a CBE licence for natural and juristic persons. The law also mandates preserving electronic copies of documents. Non-Banking Financial Sector Legislation The FinTech Law No 5 of 2022 aims to include the non-banking sector in the digital market and promote a cashless society. The FRA supervises and regulates non-banking financial activities, including capital markets, insurance and con - sumer finance. Companies must meet licensing requirements and provide the necessary tech - nological infrastructure and security measures. These regulations provide a comprehensive framework for the fintech sector in Egypt, ensur - ing compliance, security and the promotion of a digital economy. 2.3 Compensation Models In Egypt’s fintech sector, the legal framework allows for various compensation models to charge customers, both directly and indirectly. The specific models permitted depend on the particular vertical and the relevant regulatory framework. These models include direct fees such as service charges and subscription fees, as well as indirect fees like commissions on transactions and interest rates on loans. The specific obligations in relation to compen - sation models stem from the regulations of the FRA and the CBE. While these regulations cover many sectors, some specific industries and ver - ticals may fall short and not be fully addressed. 2.4 Variations Between the Regulation of Fintech and Legacy Players Please see 2.2 Regulatory Regime .
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