Harsher Penalties for Using Foreign Currency in Local Dealings
Article (126) of the Central Bank and Banking Sectors Law no. 88/2003 (Banking Law) was amended to impose harsher penalties for violations of the requirement to deal in EGP locally.
Article (111) of the Banking Law provides, in part, that dealings within Egypt, whether for purchase and sale of goods or services, must be in Egyptian pound. This rule is subject to a number of exceptions. According to Article 42 of the Executive Regulations of the Banking Law, persons or entities within Egypt can deal in foreign currencies, through authorized banks, in one of the following cases:
- If there is a supply, contractor or service contract with a foreign party which requires payment in foreign currency.
- If there is a supply, contractor, or service contract with an Egyptian party which requires payment in foreign currency, on the condition such payment must be within the limits of the foreign component necessary to execute the contract.
- Tourism companies or shopping stores which their business needs dealing foreign currencies, on the condition that a permit is obtained from the CBE and the Tourism Ministry.
- Free zone companies and companies in the special economic zones.
The penalty for violating Article (111) was increased by virtue of this recent amendment to be imprisonment for a period not less than 3 years and not to exceed 10 years, in addition to a fine of not less than EGP 1 million and not to exceed EGP 5 million. If the crime is committed by a corporate entity, the senior executives shall be punished by the aforementioned penalty in case it is proven that such executives were aware of the violation and that the violation has been committed in breach of their assumed duties.