EGYPT Law and Practice Contributed by: Ibrahim Shehata, Hesham Kamel, Mohamed Abed and Hamza Shehata, Shehata & Partners Law Firm
2.12 Review of Industry Participants by Parties Other than Regulators Concerning the banking fintech sector, the Bank - ing Law states that any bank must be audited by two auditors that are chosen from the list created for this purpose by the CBE. A single auditor cannot audit more than two banks simultaneously, and the auditor may not be a shareholder in the bank they are auditing. Moreover, the bank must inform the CBE within 30 days of appointing its auditors. Lastly, the CBE governor can appoint a third auditor for specific tasks at their discretion, with the costs to be covered by the CBE. There are no similar obligations for fintech providers within the non-banking fintech sector just yet. 2.13 Conjunction of Unregulated and Regulated Products and Services There are instances of industry participants offering unregulated fintech products and fin - tech services in Egypt. This practice, while not explicitly prohibited, raises complex questions and is coming under increasing scrutiny by the regulatory bodies concerned (including the CBE and the FRA). 2.14 Impact of AML and Sanctions Rules The AML significantly impacts both regulated and unregulated fintech providers, shaping their operations and influencing their growth within both the banking fintech sector and the non- banking fintech sector. In this regard, Egypt’s AML legislation and its executive regulations require specific obligations from multiple desig - nated entities, including entities operating under the umbrellas of both the CBE (banks, branches of foreign banks and money transfer entities) and the FRA (financial leasing companies and factoring companies). These entities also face
arrangement to the relevant regulator and notify the customers concerned. Furthermore, service providers shall be regis - tered before outsourcing fintech activities, in accordance with FRA Decree No 141 of 2023. 2.9 Gatekeeper Liability As a general rule, regulated entities (whether start-ups or large players) are responsible for ensuring that the services they provide are not used for illicit purposes. This is why all regulated actors are subject to Egyptian AML legislation, and are expected to obtain sufficient information on their clients to be able to prevent them from using their platform for illicit activities. A prominent example of fintech providers in Egypt acting as “gatekeepers” is the PSPs which are designated as “gatekeepers” with specific obligations to prevent and report suspicious transactions, conduct know your customer (KYC) and AML checks, and implement data security measures. Generally, the concept of “gatekeeper” respon - sibility for fintech providers in Egypt is still evolv - ing. In this respect, the level of responsibility for other fintech activities varies depending on the type of service and the applicable regulations. 2.10 Significant Enforcement Actions Due to the emerging nature of the fintech eco - system in Egypt and the limited public acces - sibility of enforcement actions, it is challenging to compile a comprehensive list of significant enforcement actions across either the banking fintech sector or the non-banking fintech sector. 2.11 Implications of Additional, Non-
Financial Services Regulations Please see 2.2 Regulatory Regime .
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