New Financial Technology (Fintech) Law And Regulations – Fin Tech

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

3. Brief on the Law Regulating and Developing the Use
of FinTech in Non-Banking Financial Activities -
Lexology

4. Brief on the Law Regulating and Developing the Use
of FinTech in Non-Banking Financial Activities -
Lexology

5. Egypt now has a regulatory framework for the
fintech industry | Enterprise

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.