The UAE and Egyptian central banks are coordinating their response to U.S. sanctions against Banque Misr's UAE branches. The U.S. Treasury cut off the branches from dollar transactions due to dealings with Iran, prompting an inspection by the UAE Central Bank.
The actions by the UAE and Egyptian central banks signal a coordinated effort to manage the fallout from U.S. sanctions, impacting a major Egyptian bank and potentially affecting regional financial stability and compliance standards.
The UAE Central Bank announced it will conduct a special and urgent examination of Banque Misr's branches within the Emirates. This action follows a U.S. proposal to impose special measures against the Egyptian lender, citing concerns that it poses a primary money laundering risk and operates outside the United States as a financial institution of primary money laundering concern.
The examination by the UAE's central bank will include a forensic, in-depth lookback, specifically focusing on banking transactions related to companies named in the U.S. statement. The regulator emphasized that Banque Misr's branches in the UAE are subject to the country's laws and regulations. It also reiterated expectations for banks licensed in the UAE to avoid reputational risks and respect the laws of countries whose financial institutions they utilize.
The Central Bank of the UAE stated that it periodically reviews Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) procedures at banks operating in the country, verifying the effectiveness of sanctions screening and other compliance systems. Banks are required to enhance these procedures in line with applicable laws.
The UAE and Egyptian central banks stated they are coordinating with regard to Banque Misr, after the U.S. Treasury said it was cutting off all the bank's UAE branches from dollar transactions over its dealings with Iran. Banque Misr will take all necessary measures to conduct its business as usual, the central banks said in their joint statement.
Currently, the UAE Central Bank is studying the available options regarding the status of Banque Misr in the UAE, should the special measure be imposed following U.S. legal procedures. Any decision will be made in due course, taking into account the bank's obligations to its customers in the UAE.
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