Money Laundering: Harmful Effects and Punishment in Egypt

What is money laundering? Obviously it’s not actually washing money in the washing machine or by hand so is this even the correct expression to use? Read on to find out more with Faydety 

Also read: money laundering definition and process

The definition of money laundering

Simply put it is the act of making money illegally and then funnelling it through legitimate businesses to hide its origin.

The 3 stages of money laundering:

1- Placement: the movement of cash away from its illegal source

2- Layering: making it difficult for the government to find the source of the money or detect the money laundering

3- Integration: which is absorbing the illegally obtained funds into the economy through legitimate business

“These three steps can also be done in 2 steps instead of 3

The harmful effects of money laundering on the country

Economy: inflation and increase in prices

Politics: criminals will have more power

Society: significant damage to income distribution and increased social inequality

More financial definitions in our Finance 101 blog

Punishment for money laundering in Egypt

Law #80 of 2002 was implemented as an international law starting 22^nd of May 2002.

Amended per law number 78 of 2003 and implemented as international law on 8^th of June 2003.

Article 14 stated that “any person who commits or attempts to commit money laundering offence… shall be imprisoned for a period not exceeding seven years… and also fined twice the exact sum that was laundered”.

However the amendment states that if more than one person is involved in the money laundering the one who reports the others will not be charged or fined.

The anti money laundering unit in the Central Bank of Egypt

Also known as the Money Laundering and Terrorist Financing Combatting Unit was established in 2002 as part of the financial intelligence unit.

They receive information and tips about any suspected operations such as money laundering or terrorism financing or financial improprieties and after analysing the data they enforce the law.

More details on the anti money laundering law here

Common methods of money laundering

Money from the following operations is confiscated:

• Planting and manufacturing prohibited drugs and their essences including exporting and selling them.
• Kidnapping.
• Importing weapons, ammunitions, and explosive materials including selling and buying and illegally manufacturing them without a licence
• Theft of funds
• Fraud.
• Prostitution.
• Crimes involving antiquities.
• Environmental crimes including hazardous material and waste.
• Crimes punishable under Egyptian and international laws per international agreements.

More on the Egyptian money laundering combating unit here