On 14 February 2022, Egyptian President Abdel Fattah El Sisi signed the country's first Financial Technology Law, No. 5 of 2022 ("the FinTech Law") into law1. The FinTech Law is aimed at introducing the long-awaited rules governing the provisions of various non-banking financial services/activities by "concerned entities", through technological mediums aligned with the Egyptian Government's inclusion initiative2.
The FinTech Law is further intended to assist with the regulation and development of financial technology used in non-banking related financial activities by "concerned entities" through, inter alia, the enhancement of financial inclusion and the expansion of the base of beneficiaries from the non-banking financial activities, whilst also reducing the costs to benefit from these activities.
The FinTech Law identifies "concerned entities" as non-banking financial markets and tools, under the regulatory authority of the Financial Regulatory Authority ("FRA"), who provide activities/services to Egyptian residents, including:
- capital markets;
- insurance activities;
- real-estate financing;
- small, medium and micro enterprise financing;
- financial leasing; and
- consumer finance.
The FinTech Law further provides that the only competent administrative authority for the supervision and application of the provisions provided for in the FinTech Law is the FRA, which is accordingly solely empowered to take all necessary action to support and develop the implementation of modern financial technology throughout the non-banking financial activities3, such as:
- implementing processes and procedures for the establishment of companies in terms of the FinTech Law;
- granting of the necessary licenses and approvals;
- implementing and approving technological applications to ensure compliance with the provisions of the FinTech Law;
- implementing control mechanisms relevant to financial technology, either itself or through a third party;
- developing and implementing security mechanisms for the control of data and hardware applicable to financial technology;
- exercising control and supervision over the applicable financial technology entities; and
- developing awareness of financial technology activates.
The FinTech Law set important dates for compliance with these provisions and regulations, as follows4:
- as no executive regulations will be issued in the future, the FRA is required to issue the relevant implementing executive decisions within six (6) months of February 2022;
- all applicable entities and companies shall comply with the provisions of the FinTech Law within six (6) months of the issuance of the FRA's executive decisions, referred to in point 1 above;
- the FDA's Board of Directors is granted the right to extend the compliance period, referred to in point 2 above, for a similar period, not exceeding a maximum period of two (2) years; and
- the Prime Minister is also empowered to extend the compliance period for a further period of two (2) years as a maximum extension.
Failure to comply with the provisions of the FinTech Law may attract severe penalties, including imprisonment or fines (ranging from EGP 20 000 to EGP 2 million)5. Contraventions include:
- engaging in financial technology activities without obtaining licenses or authorisations; and
- contraventions in relation to confidentiality and/or data protection obligations.
Footnotes
1. Sisi signs law on use of financial technology in non-banking financial activities-SIS
2. Issuance of Egypt's FinTech Law - Al Tamimi & Company
5. Egypt now has a regulatory framework for the fintech industry | Enterprise
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