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Cleaning up its act
Published in Al-Ahram Weekly on 23 - 03 - 2006

Egypt is determined to play an active role in combating money laundering and terrorist financing, reports Sherine Nasr
Until relatively recently Egypt had a far from enviable record when it came to anti-money laundering legislation. That position has now been reversed, the impetus for change coming in 2002 when Egypt enacted an Anti- Money Laundering Law.
This month Cairo will host three major anti-money laundering events within a 10-day time span. The first, the Middle East and North Africa Financial Action Task Force (MENAFATF) conference, meets in Cairo this week. MENAFATF is the body responsible for determining which of its 16 members is failing to apply the 40 recommendations adopted by the group, and ratified by the Security Council, to curb money laundering activities.
"Although the group does not represent a political alliance it has come to play an important role in spotting countries that are not being cooperative. They can then be subject to serious economic penalties," says Mahmoud Abdel-Latif, president of MENAFATF. Among the penalties that can be imposed is a complete freeze on the offending country's dealings with international financial organisations and institutions such as the World Bank.
Jordan, Saudi Arabia, Syria, Iraq and Kuwait are among the states that will be represented at the Cairo conference. MENAFATF is also currently negotiating with "Palestine and Sudan over membership of the group.
"In order for a country to become a member it must first enact adequate legislation and show that it is in possession of the means to enforce such laws," says Abdel-Latif. Some countries in the region, he continues, lack the necessary legal framework, while others do not have the expertise to detect infringements, which "is why we are so keen on maintaining high levels of cooperation among member countries".
One aspect of such cooperation is the mutual assessment among members of both legislation and its implementation. "In so doing we convey a clear message to the international community that we are working together to combat money laundering and terrorist financing."
This week also saw the opening of the US-Middle East/ North Africa Private Sector Dialogue on Combating Money Laundering and Terrorist Financing, organised beneath the umbrella of MENAFATF. The event brings together members of the US treasury and senior banking figures and the representatives of private sector companies operating across the region for a mutual dialogue on the best ways to combat money laundering and terrorist finance.
Last week the Egmont Group also met in Cairo. Representatives from more than 50 countries, including Canada, Korea, the US and four Arab states, met with representatives from international organisations such as the Security Council, the World Bank (WB) and the International Monetary Fund (IMF), for a three-day discussion on the group's current agenda and the possibility of admitting new members.
The Egmont Group is the international umbrella for all anti-money laundering and terrorist financing units in member countries. Among its current membership of 101 states only four -- Egypt, Lebanon, the United Arab Emirates and Qatar -- are Arab, though Bahrain is seeking admission.
"It is an accolade that Egypt be selected as the venue for the group's annual meeting. It reflects the confidence this prestigious group has in Egypt as a leading regional force against money laundering," said Serry Siam, chairman of the Egyptian Money Laundering Combat Unit (EMLCU).
Egypt, says Siam, has played an active part in formulating the group's internal systems, and is at the forefront of persuading other Arab states to join.
"Not that it is easy to become a member of the group," Siam explains, since it is conditional on adequate legal and legislative structures being in place.
Egypt, in collaboration with the US, is currently helping Qatar fulfill its membership requirements by providing legal training. "It goes without saying that it is in the interest of all countries to combat money laundering and terrorist financing, two of the greatest dangers to national economies," says Siam.
While Egypt's efforts on an international level have been widely recognised, it has also been busy on the local front. The most recent initiative was to set up a national coordination committee combining all the authorities concerned with applying anti-money laundering legislation. EMLCU, formed in 2002, is at the forefront of Egypt's campaign. The unit compiles and keeps track of information in the form of Suspicious Transaction Reports (STRs).
The EMLCU receives STRs from Egyptian banks and their foreign branches, from branches of foreign banks operating in Egypt, foreign exchange companies and entities licensed to deal in foreign currency or engaged in money transmission and money receiving activities. It also receives reports from postal saving funds, mortgage companies and organisations that undertake lease financing or any type of insurance or reinsurance activities.
The unit sets the rules used in establishing the identity of customers and coordinates with supervisory authorities to establish, and provide the means necessary to guarantee, that financial institutions comply with all the provisions of the Anti-Money Laundering Law.

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