The Central Bank of Egypt (CBE) has issued instructions and controls to facilitate procedures for opening bank accounts for individuals and small enterprises.
In a letter to banks working in the local market, the CBE said that the Money Laundering and Terrorist Financing Unit (MLCU) was consulted to provide more support and facilitation in this regard.
The CBE explained that this comes as part of the due diligence procedures for financial inclusion products and services issued by the MLCU on 11 November 2018, and its amendments issued in March 2020.
This also comes as part of the rules governing the classification of financial inclusion products and services issued by the CBE on 17 July 2019, and its approach to enhance financial inclusion and work to raise its rates.
The CBE indicated that the agreement with the MLCU includes the application of those procedures and rules to open traditional accounts for new clients without obtaining prior CBE and MLCU approval.
The new rules and regulations also included facilitating the procedures for groups that want to open accounts for micro-enterprises and who do not have a commercial register or licence to practice the profession.
They also make procedures easier for customers who are craftsmen and business owners, by opening accounts for them under the category of economic activity accounts. These customers will be able to provide verification of their identity through ID cards.
The CBE has also decided to raise the daily and monthly maximum limits for transactions that take place on accounts belonging to individuals, companies and micro enterprises.
It stated that the rise is based on the above, and with the aim of achieving maximum benefit from the rules issued and helping banks reach target groups. The CBE’s Board of Directors has also approved the amendments of rules governing the classification of financial inclusion products and services in terms of banks obtaining approval from the CBE, which in turn polls the MLCU.
These amendments included the application of the rules and due diligence procedures for financial inclusion products and services issued in March 2020 to new customers when opening traditional bank accounts. This would be without the need to obtain CBE and MLCU approval, provided that high-risk clients are excluded.
The CBE also agreed to amend the maximum limits on transactions and account balances for regular and legally-defined customers, the latter including companies and micro-enterprises. The move would provide more flexibility to deal with these accounts.
It added that for individuals, the bank determines the maximum account balance, provided that the maximum daily transaction limit is EGP 30,000 and the monthly maximum is EGP 100,000.
As for companies and micro establishments that have documents or headquarters, verification is undertaken using any other means. The maximum account balance is determined by the bank, given that the maximum daily transaction limit is capped at EGP 40,000 and the maximum monthly dealing is EGP 200,000.
For companies and micro-establishments or self-employed customers and business owners who do not have documents or headquarters, but are engaged in an economic activity, the maximum balance of the account is determined through the bank. The maximum daily transaction is EGP 30,000, and the maximum monthly transaction limit is EGP 100,000.
The CBE indicated that due diligence measures for bank clients issued by the MLCU in February 2020 will be applied in case these established limits are exceeded.
It referred to the decision made by the MLCU’s Chair of the Board of Trustees to apply due diligence procedures for financial inclusion products and services to new clients when opening traditional bank accounts. This includes both current and saving accounts, without the CBE needing to obtain the approval of the Unit, provided that the high-risk clients are excluded.
The CBE indicated that an explanatory memorandum will be issued to clear up these procedures, in cooperation with the MLCU.
Alaa Farouk, Chairman of the Agricultural Bank of Egypt (ABE), said that the CBE’s announcement of the simplified procedures to open accounts for individuals and companies is an important step.
He also said that it will have a significant impact on increasing the rates of new customers joining the banking sector and the formal economy. This is especially so as it will facilitate the opening accounts for small traders and owners of micro enterprises.
He added that this step will open the way for increasing digital payment methods and reducing the use of cash, which will lead to further progress towards financial inclusion.
Banking expert Mohamed Abdel-Aal said that these measures will allow banks to have a new customer base. Banks will be able to serve these new customers and help them.
He added that the new facilities include customers being able to benefit from brand new banking services, including opening accounts using national ID cards.
Abdel-Aal said that one of the most important features of this decision is that it helps implement the financial inclusion plan. It will also attract the informal economy, which makes up about 60% of the Egyptian economy, into the formal economy.