Why is Due Diligence Important in Egypt?
The adoption of the feature of due diligence has been considered essential for the risk management and guaranteeing adherence to regional laws in the jurisdiction of Egypt. Initiative like these ends up helping them to make well-informed decisions and steer clear of undesirable agreements simply through assisting companies in identifying possible risks like operational inefficiencies, legal problems, or financial instability as well.
The Due Diligence Process of Egypt
The due diligence procedure in the jurisdiction of Egypt does consist of a number of processes that are currently assisting companies in obtaining required data so they may make wise choices. Following is the procedure explained:
Identification and Verification: It is referred to as an obligation to obtain fundamental data regarding the particular company or person who is being assessed is the first stage. This also ends up involving checkboxes like confirming the company’s or individual’s identification, ownership structure, and background at the same time.
Financial Analysis: The procedure of examining the details such as balance sheets, income statements, and cash flow statements of a particular company is counted as a part of financial due diligence as it helps in evaluating the company’s profitability and overall financial health also.
Legal Compliance Review: There should be a comprehensive analysis regarding the legal position of business which is being analyzed such as any pending litigation, regulatory compliance, and intellectual property rights are must for the legal compliance review.
Operational Assessment: It has been advised that the companies must also evaluate its personnel, management group, and operational aspects of the business as it aids in locating any inefficiencies or operational concerns altogether.
AML Compliance: It must be determined if a corporation complies with the anti-money laundering (AML) requirements as part of their due diligence specifically for financial institutes in the region of Egypt. This additional checkbox is more likely to entail reviewing if the track record of business is adhering to AML regulations and comprehending its protocols or not.
Enhanced Due Diligence in Egypt
It is interesting to know that businesses and financial institutions in Egypt should definitely perform additional checks of due diligence in specific situations that lie in the high risk category. A more thorough version of the regular due diligence procedure is considered necessary specifically when working with the clients, industries, or transactions that are having the high risk nature. Transactions that are more prone to have complicated structures, high-risk jurisdictions, or politically exposed persons (PEPs) may fall under the category of high risk.
There is no doubt that enhanced due diligence is considered as one the most essential parts when it comes to effective AML compliance in its nature. The increased level of due diligence for AML plays a pivotal role in making sure if the companies are not unintentionally financing terrorism or laundering money in the region of Egypt. Practice of such a sort has frequently necessitated taking extra measures in order to confirm the funds’ origins, examine the transaction in greater detail, and keep an eye on continuing activities at the same time.
Enhanced Due Diligence Checklist Egypt
It is being advised to organizations and financial institutions to definitely adhere to additional tests and processes that are included in an extended due diligence checklist Egypt. The following summarizes the potential contents of an improved due diligence checklist:
Identity Verification:
There should be a collection of comprehensive identifying records for the company and its beneficial owners as it will help in examining the operation of the company and its legality altogether.
Source of Funds:
It is mandated to examine the source of wealth and money and particularly for the clients who belong to high-risk nations or high-net-worth people (HNWI) in order to recognize where the funds originate from and determine whether they were acquired legally or not.
Transaction Monitoring:
There should be a strict check of keeping a careful eye on the transactions of that particular client with an aim to spot if there are any odd trends or acts.
Ownership and Control Structure:
It has been advised to look into the company’s or individual’s ownership and control structure with an objective to guarantee the required level of transparency. There should be proper examination of any intricate ownership arrangements that might hide the real beneficial owners under the carpet.
Screening Against Sanction Lists:
Screening is one of the most essential steps where the client gets verified against lists of international sanctions, such as those issued by the European Union, the United Nations, and other pertinent organizations in order to prove objection free record. It should be verified by the relevant authorities that the customer and any affiliated companies are not engaged in any money laundering or terrorism financing-related activities.
Ongoing Monitoring:
There should be established mechanisms to periodically assess and track the activities of the client over the time in order to guarantee ongoing adherence to anti money laundering laws.
