UAE Central Bank orders urgent probe into Banque Misr branches after US warning

The United Arab Emirates Central Bank announced an urgent investigation into Banque Misr's branches operating in the UAE following a warning from the US about money laundering concerns. The probe, set to begin this weekend, will involve a thorough examination of the financial transactions of the Egyptian lender's UAE entities, with a focus on the period highlighted in a statement released by US authorities.

The UAE Central Bank's Financial Crimes Enforcement Network recently proposed a rule that could potentially strip Banque Misr's UAE branches of their ability to conduct business with US financial institutions due to alleged money laundering activities.

According to the Central Bank, Banque Misr's UAE branches are required to adhere to local laws and regulations. The lender currently maintains five branches in the UAE. The regulator emphasized that licensed banks in the UAE must not jeopardize the country's financial system's reputation, must respect the laws of other jurisdictions involved in their transactions, and must not misuse the UAE's advanced financial infrastructure.

The Central Bank reiterated its commitment to regularly scrutinizing AML/CFT procedures at UAE-based banks and to verify the effectiveness of their sanctions screening systems. The regulator stated that it expects banks operating in the UAE to enhance their anti-money laundering and counter-terrorism financing protocols as required.

The Central Bank is currently evaluating the potential consequences for Banque Misr should it decide to impose the special measure against the lender following the completion of the investigation in accordance with US laws. The appropriate decision will be made in due course, taking into account the bank's obligations to its customers in the UAE.

The UAE Central Bank has been proactive in addressing financial entities that violate UAE laws and regulations. In June, a foreign bank's branch in the UAE faced a Dh20 million fine for breaching anti-money laundering rules, marking one of the most substantial penalties imposed in the country. The regulator reiterated its rigorous enforcement stance, noting that they have previously penalized financial entities for significant, repeated violations of AML/CFT and sanctions rules.