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FRA to Implement New Fintech Law
In recent years, Egypt has been keen to stimulate investment in the fintech space and secure related transactions. The government took serious steps to set in place a legal framework governing the said sector. The Fintech Law No. 5 for 2022 (the “Law”) has been enacted and published in the Official Gazette on 8 February 2022 to govern companies wishing to undertake fintech activities.

 On 16 March 2022, the Financial Regulatory Authority (the “FRA”) issued Decree No. 58 for 2022 (the “Decree”) regulating the licensing process for fintech companies. The Decree was published in the Official Gazette on 12 April 2022 and came into force on 13 April 2022. We shall delve into the key highlights of the Decree as follows:  

Key highlights of the Decree

The Decree is a manifestation of the broad powers granted to the FRA by the Law to regulate and supervise the fintech sector. The Decree lists exhaustively the following:

  • Prerequisites for incorporating fintech companies;

  • Requirements to obtain a fintech license;

  • Procedures to obtain a fintech license;

  • Requirements for licensees to obtain the FRA approval to start operations; and

  • Procedures to outsource fintech services


Prerequisites for incorporating fintech companies

Incorporation applications for fintech companies shall be filed through the FRA e-platform. The application must include, among others, shareholders’ data, business plan and an acknowledgment of the company’s capability to sustain fintech operations and guarantee its security. The incorporation approval shall be issued within 30 days from the date of filing. If the approval is not granted within the said period, it would be considered as a rejection of the application.

Requirements to obtain a fintech license

In addition to the above-stated incorporation requirements, companies wishing to operate in the fintech sector must have a shareholding structure composing of at least 50% juristic persons and 25% financial institutions. The employment and managerial structure must be adequate to the activity the company intends to undertake.

Procedures to obtain a fintech license

Already existing companies wishing to undertake fintech activities must submit to the FRA, via its e-portal, all required documents evidencing the fulfillment of the relevant requirements along with other documents such as the articles of incorporation and the tax card.

Requirements for licensees to obtain FRA approval to start operations

A license for fintech companies is not enough to start operations. Licensees must obtain the approval of the FRA to operate in some domains and fields of fintech. These domains are listed in the Law. As is the case above for obtaining a fintech license, licensees must file an application via the FRA’s e-portal and provide documents evidencing their fintech capabilities, security measures and employment and managerial structure.

Outsourcing fintech services

The Decree gives the opportunity for companies to provide fintech services via outsourcing companies. This, however, does not mean that the former is excluded from the requirements stated above.

Applicability of the Decree

Companies already operating in the fintech sector have 6 months from the date on which the Decree came into force in order to abide thereby.

Market reaction

Many private companies see the new legal framework governing the fintech sector to be a way to achieve financial inclusion and reach as many customers as possible. For instance, Mr. Mahmoud El Saka, Chairman of the Arab African Company for Financial Leasing finds that fintech services are easy to deal with, cut off cost and help developing microfinance activities. Being able to operate in fintech will also reduce the companies’ expenses with regard to establishing new branches and hiring new employees, not to mention the improvement of the service quality.

The FRA intends to invite all fintech stakeholders to a meeting to discuss the future requirements, procedures and standards.
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