money laundering and financing of terrorism

What Is Money Laundering?

The process of taking the proceeds of criminal activity and making them appear legal.

The differences between money laundering and financing of terrorism:

Financing of terrorism	Money laundering
To finance illegal terrorist activity	Making dirty money clean	Purpose
Illegitimate and legitimate	Illegitimate	Source of funds
Does not require a predicate crime	Perpetrators of predicate offences and their accomplices	Perpetrators
Does not require the occurrence of a predicate crime	Requires the occurrence of a predicate crime	Criminalization
Does not require a large sum of money	large sum of money	Amount of funds
Not required to be complex	High complexity	Degree Of Complexity

Similarities between money laundering and financing of terrorism

Methods

Confidentiality

International character

The Egyptian legislative framework for money laundering

A law was issued against money laundering No. 80 for the year 2002 dated May 22, 2002 the Law was amended three times as follows

By virtue of Law No. 78 for the year 2003

By virtue of Law No. 181 for the year 2008

By virtue of Law No. 36 for the year 2014

The elements of  money laundering crime

Predicate offense

 Subject of money laundering crime

The Material element

The Moral element

Predicate offense

The old trend of the Egyptian legislator: is to determine the predicate offenses involved in money laundering activities.

The modern trend: the Egyptian legislator did not adopt the old trend but set a provision define the predicate offenses as:

(Every act that constitutes a felony or misdemeanor under Egyptian law, whether the crimes are committed within the Egyptian territories or abroad, provided that such crimes are penalized by both Egyptian and foreign laws)

Subject of Money laundering crime

if the funds are the proceeds of predicate offense.

The Egyptian legislator defines such funds as

(The national currency, foreign currencies, securities, commercial papers, any valuable items, whether real estate or tangible or intangible movable property, or any rights related thereto, and deeds and documents evidencing any of the said rights)

The Material element

Any conduct involving the acquisition, holding, disposing of managing, keeping, exchanging, depositing, guaranteeing investing, moving or transferring funds, or tampering with their value or to conceal funds, alter the nature, source, location, ownership, any interest therein, change the reality, or prevent the discovery thereof or impede the identification of the perpetrator of the crime where from such funds are generated.

The Moral element

Money laundering is an intentional crime is constituted where the criminal intent is established of its aspects; as of the perpetrator’s knowledge, and will. It is established when the money launderer knows that such funds are the proceeds of any of the crimes stipulated in Article (2) If criminal ignores the origin of the money, in that case, the criminal intent is not established for lacking one of its aspects;

The moral element for a crime is established only if the specific criminal intent exists, the availability of the general criminal intent is not enough. The specific criminal intent is established if criminal, when committed the crime, has requisite intent to conceal funds, alter the nature, source, location, ownership, any interest therein; or change its reality; prevent reaching the perpetrator of the predicate offense

Egyptian Anti-money laundering regulators and its obligations

Supervisory Authorities

Law enforcement Authorities

Money Laundering Combating Unit (MLCU)

The Egyptian Public Prosecution

First: Supervisory Authorities

 1-What are supervisory Authorities

Central Bank of Egypt (CBE)

CBE supervises banks operating, foreign exchange entities and the entities licensed to deal in foreign currency and money transfers

Egyptian Financial Supervisory Authority (EFSA)

  Subject to its jurisdiction the Egyptian Stock Market, real estate finance and insurance companies

Ministry of Communications and Information Technology (MCIT

MCIT supervises the postal saving funds

Ministry of Commerce and Industry

Supervises the entities performing transactions regarding valuable metals and precious stones, as well as real estate brokerage activities

The function of the Supervisory Authorities

Checking the commitment of the financial institutions regarding combating money laundering

Coordination with the Money Laundering Combating Unit to establish supervisory control

Verifying the financial institutions in implementing systems for the identification of its customers in coordination with the Money Laundering Combating Unit

Developing plans and training programs for the employees of the Authorities concerned with combating money laundering crime

Egyptian Law enforcement Authorities

Every Authority falls within its legal competence the acts of combat and investigate all crimes, including money laundering crimes.

Such as:

Ministry of Interior

          Administrative Control Authority

          National Security Agency

The function of these Authorities:

Exchange of information and coordinating with the Money Laundering Combating Unit 

Assist in the investigation and examination procedures

Notifying the Money Laundering Combating Unit when there is a suspicion of money laundering activity

The Money Laundering Combating Unit. (MLCU)

Establishment:

According to Article 3 of the Anti-money Laundering Law No. 80 of 2002, MLCU is an independent unit functioning within the Central Bank of Egypt (CBE)

The formation of the unit

The Unit is composed of Council of Trustees that granted an independence from the State institutions.

The Unit's Council of Trustees is responsible for managing its affairs.

The Unit comprises of a sufficient number of experts and specialists in the field of combating money laundering

Responsibilities of the Money Laundering Combating Unit

Develop Suspicious Transaction Reports' models and instructions on filling it

Receiving notifications

Establishment of a database

Examination

Requesting information from the financial institutions

Exchange of information with counterpart units (Egmont Group)

Requesting inquiries from Law enforcement agencies

Notifying the Public Prosecution of reports or indications of the occurrence of money laundering

Request for provisional measures

 The role of the Public Prosecution

undertake investigation and examination of reports and information received thereby

Issuing an  asset freezing orders to prevent the defendant from disposing of his assets

Disclosing of account data and balances

Forming a committee of banking supervision and control sector within the Central Bank in order to examine the bank accounts and bank transfers of the accused and prepare a report to be submitted to the Public Prosecution

Referring the papers of the case to the Criminal Court in case of conviction

Regional and international cooperation with counterparts

Training of staff in coordination with the Money Laundering Combating Unit

The difficulties facing the investigation process of the money laundering crime:

The problematic of the connection between the money laundering crime and the  predicate offense

Do we have to investigate the predicate offense with the money laundering crime or can we investigate each separately?

Is the issuing of conviction  judgments in the predicate offense essential to punish the accused for the money laundering crime?  

The effect of judgment of acquittal or case closing order in the predicate offense on the money laundering crime investigations

The problematic of seizing the funds subject of the money laundering crime

Difficulties concerning international cooperation procedures and judicial assistance requests

Extending the investigation procedures in order to track such funds

The way the Egyptian legislator followed to overcome this problem (Replacing the confiscation penalty with additional fine)

Its impact on the investigation conducted by the public prosecution.

Translation by Heba Musa