الهيئة العامة للرقابة المالية

FRA and Ministry of Local Development Collaborate to Expand Non-Bank Financial Services in Governorates – Wednesday  7 May 2025

As part of Egypt’s efforts to enhance financial inclusion and drive sustainable economic and social development, Dr. Mohamed Farid, FRA Chairman holds a meeting with Dr. Manal Awad, Minister of Local Development and May Abd El-Hamid, CEO of the Social Housing and Mortgage Finance Fund (SHMFF). The meeting focused on exploring avenues and mechanisms for joint collaboration and determining how best to utilize non-bank financial services and insurance products offered by FRA-regulated entities within the governorates.

The meeting also featured a detailed overview of FRA-regulated financing, investment and insurance solutions, spanning capital markets, mortgage finance, leasing, factoring, consumer finance and diverse insurance products.

It further explored the advantages of these non-bank financial services and products for the Ministry of Local Development’s stakeholders, notably governorates and Social Housing and Mortgage Finance Fund. A key focus was on insurance coverage and its role in shielding citizens from potential risks, ultimately fostering greater economic and social resilience and reducing future burdens.

Dr. Mohamed Farid underscored that this meeting demonstrates the Authority’s proactive approach to closer collaboration with state entities. He emphasized the pivotal role of non-bank financial solutions in fostering sustainable economic development initiatives, stating, “Our commitment lies in pioneering and providing innovative financing, investment and insurance solutions that address the diverse needs of citizens throughout all governorates, with a particular focus on reaching and empowering marginalized groups to achieve our financial inclusion targets”.

Dr. Farid highlighted FRA’s strong focus on integrating with the Ministry of Local Development, as this collaboration is key to deliver essential services to villages and centers, particularly those prioritized in local development agendas and national initiatives.

Minister of Local Development Dr. Manal Awad affirmed that this collaboration with FRA marks a crucial step towards empowering governorates with modern financial tools. She stated, “Our aim is to foster a supportive environment where citizens can readily access effective financing and insurance services, leading to improved living standards and the creation of new job opportunities, especially within local communities.”

Dr. Manal also stressed the significance of promoting financial literacy and awareness of available services to ensure active citizen engagement in economic activities.

To activate this collaboration, joint working groups will be formed, comprising representatives from FRA, Ministry of Local Development and Social Housing and Mortgage Finance Fund. These groups will formulate an executive plan for the coming period, prioritizing actions based on identified needs to maximize the reach and impact of non-bank financial services for citizens, thereby fostering greater social stability.

This collaborative effort stands as a model, highlighting the critical importance of integration among state institutions, particularly Ministry of Local Development and Social Housing and Mortgage Finance Fund, in supporting and accelerating the achievement of sustainable development goals across all governorates

FRA Issues Strong Warning on Illegal Promotion of Financial Products – Tuesday 6 May 2025

• FRA stresses the significant risks of dealing with unlicensed financial entities and urges the public to always verify licenses.
• Unlicensed entities and online platforms operating in the field of receiving & pooling funds for investment will face legal consequences.
• Do not participate in subscriptions for any securities (shares and bonds) unless the Authority has explicitly approved the public offering.
• Exercise extreme caution and avoid investing through companies lacking the necessary licenses to receive funds for investment or platforms offering financing without authorization.
• FRA urges citizens not to be misled by fictitious investment schemes or to deal with entities that have not obtained approvals from regulatory authorities.
• FRA has dedicated a section on its website listing entities licensed to provide non-bank financial services such as investment, financing and insurance.
• Unlicensed entities and online platforms that provide financing and receive funds for investment purposes expose themselves to legal accountability.
• The negative list of unlicensed entities offering non-bank financial services and products will be released shortly, pending the receipt and verification of citizen reports and the Authority’s review of company business models.
• FRA regulates the trading of investment fund certificates representing shares in metals, including (gold), and not direct investment in gold. The Authority has only approved three funds and their data is available on FRA’s website.
• FRA warns citizens against investing in real estate through unlicensed entities or without verifying ownership.
• FRA warns citizens against investing in virtual and encrypted currencies.
• Citizens should promptly report unlicensed non-bank financial product solicitations to FRA at whistleblowing@fra.gov.eg.

In its ongoing role of supervising and regulating non-bank financial markets and instruments, the Financial Regulatory Authority (FRA) once again warns all citizens not be misled by online solicitations from individuals and entities urging investment in financial instruments and products that violate Egyptian law. Engaging with these unauthorized offerings carries significant risks for individuals and those who promote them will face legal consequences.

The Authority has recently noted the online promotion of investment invitations and unlicensed financing platforms targeting citizens. Consequently, FRA has warned citizens about the dangers of responding to these unlicensed entities operating in receiving & pooling funds for investment, as this exposes them to significant risks of fraud or scams without regulatory protection.

The Authority has recently become aware of a significant number of websites and social media platforms that are promoting and soliciting public investment in projects in exchange for returns, all without the necessary operational licenses or approvals. These actions are in direct breach of Capital Market Law No. 95 of 1992, Article 4, which unequivocally requires a Financial Regulatory Authority-approved prospectus for any public offering. Additionally, they violate Law No. 146 of 1988 concerning companies operating in the field of receiving & pooling funds for investment, particularly Article 1, which explicitly forbids any entity other than publicly listed joint-stock companies from receiving public funds for investment purposes, directly or indirectly soliciting public subscriptions, or collecting such funds for investment or participation.

In its ongoing commitment to prioritize the protection of stakeholders within the non-bank financial services sector, the Authority has established an updated section on its website. This section provides a comprehensive directory of all entities duly licensed to conduct non-bank financial activities and offer investment, financing and insurance services and products, thereby facilitating public verification of their credentials. Furthermore, the Authority is currently developing a “negative list” for its website which will encompass all entities identified through substantiated reports as providing non-bank financial services and products without the requisite licenses or approvals. To prevent citizens from exposing themselves to high risks, this warning is issued against dealing with these entities. Furthermore, the Authority is taking legal measures against these platforms or companies.

The Authority encourages citizens to report any solicitations for financial, investment or financing products from unlicensed entities by sending details and supporting evidence to (whistleblowing@fra.gov.eg).

Accordingly, the Authority issues a strong warning to all participants in the Egyptian market to exercise utmost caution and not be tempted by these solicitations promising quick profits. It reiterates that those who advertise and promote such unauthorized investments will be held legally responsible by the relevant authorities.

The Authority also cautions against the illegal promotion of other instruments, specifically virtual encrypted currencies. It urgently warns all Egyptian market participants to be extremely vigilant and avoid recent solicitations to engage in these currencies due to their substantial risks, potential involvement in financial crimes and cyber piracy, lack of underlying value for stability and user protection and the exposure of users to fraud and legal repercussions for violating Egyptian law. Egyptian law prescribes imprisonment and/or a fine of one to ten million Egyptian pounds for anyone trading, promoting or offering activities related to these currencies without prior authorization from the relevant bodies.

This public awareness campaign by the Authority reflects its ongoing commitment to enhance financial literacy, enabling citizens to make informed investment choices. This aligns with its core function of safeguarding the rights of all participants in non-bank financial markets, fostering market stability and bolstering trust in these services.

Concerning recent observations of entities and individuals soliciting gold investments, FRA strongly advises citizens to disregard any such solicitations from unlicensed entities. Engaging with them poses significant risks to investors and the promoters face legal repercussions.

In its regulatory role over non-bank financial markets, FRA emphasizes that it has specifically regulated gold investment through licensed investment funds offering gold certificates. This follows a comprehensive regulatory framework for precious metals investment via funds, distinct from direct dealings between metal traders and investors/consumers, which are governed by Commercial Law and Law of Precious Metals and Gemstones. The Authority has already approved three gold investment funds for public offering and urges citizens to avoid depositing funds for metal investments with any entities other than these authorized funds to protect their capital.

Companies intending to promote public share offerings or receive funds should first contact the Financial Regulatory Authority (FRA) for information on the applicable legal and regulatory requirements before making any public announcements.

A list of entities licensed for non-bank financial activities (investment, non-banking finance, insurance) is available at: https://fra.gov.eg/registration/

For inquiries regarding the legal and regulatory requirements for promoting public share offerings, please email: Inquiries@fra.gov.eg

FRA Regulates Gold Investment Fund Certificates, Not Direct Gold Trading – Tuesday 6 May 2025

• The Authority has created a comprehensive framework to protect stakeholder rights, encompassing licensing of investment funds and their investment policies, as well as creating registers for authorized gold traders and custodians engaged with investment manager.
• To date, the Authority has licensed only three gold investment funds and crucially, their comprehensive investment prospectuses have been made publicly available.
• FRA registers qualified gold suppliers (different from public sellers) and qualified custodians who are authorized only for investment funds, not for direct individual dealings.
• FRA-licensed funds have attracted 200,000 investors, representing a total market value of EGP 2.1 billion.
• Commercial Law and Law of Precious Metals and Gemstones provide the legal framework for dealings between metal traders and investors or consumers, a domain outside the regulatory authority of FRA.

In accordance with Article 35 of the Capital Market Law No. 95 of 1992, FRA regulates the interaction between licensed investment managers and authorized metal trading companies, specifically concerning the issuance of investment fund certificates for metals such as gold. This regulatory framework does not extend to a general license for precious metal trading.

FRA warns against misleading promotions for direct gold purchases falsely suggesting its endorsement of metal trading companies. FRA’s established register is strictly limited to companies authorized to transact with investment managers and does not regulate precious metal traders’ dealings with the public. Instead, these public interactions are governed by the Commercial Law (Law No. 17 of 1999), Law Precious Metals and Gemstones (Law No. 68 of 1976) and other relevant Egyptian legislation, a separate legal framework from the Capital Market Law (Law No. 95 of 1992) which specifically regulates precious metal investment funds, not direct transactions between traders and investors in Egypt.

FRA strongly urges citizens and investors to exercise utmost diligence and caution. Any gold trading company falsely claiming affiliation with or licensing from FRA should be immediately reported, as the Authority will pursue stringent legal action against such entities. FRA also underscores the critical need for individuals engaging in precious metal investments outside of regulated investment funds to secure physical possession of the metal to ensure the protection of their rights.

As a key aspect of its regulatory oversight, FRA emphasizes that citizens’ engagement with precious metals is specifically governed through investment funds under the Capital Market Law No. 95 of 1992. To ensure robust investor protection and transaction integrity, FRA has issued number of decrees. These include establishing clear controls for metal investment funds operating as securities, with specific criteria for eligible metals such as hallmarking and verified ownership. Moreover, investment managers are mandated to transact in metals solely with FRA-registered trading companies and utilize the services of FRA-registered custodians. FRA has established regulations for both the registration and delisting of precious metal custodians as providers of movable financial asset services in its registry, alongside the specific conditions that gold trading companies must fulfill to be eligible for buying and selling transactions with investment managers.

In light of the above, the Authority has approved three funds for investment in precious metals, specifically gold: AZ-Gold Fund by Azimut Company, Al Ahly Financial Investments Management and Beltone Evolve Gold Investment Fund (Sabayek). Currently, approximately 200,000 investors have invested a total of EGP 2.1 billion in these funds.

Legislative and Regulatory Evolution of Precious Metal Funds:

Article 35 of the Capital Market Law No. 95 of 1992 permitted investment funds to deal in movable financial assets, including precious metals like gold. This was followed by the following executive decrees:

• Decree No. 71 of 2021 allows the Authority to license joint-stock companies, banks, and authorized investment fund companies (acting alone or with others) to invest in metals as transferable financial securities, provided this is within the fund’s defined objectives and governs such dealings.

The decree specified the controls that must be met by the metals in which investment is permitted, which are:

The competent authorities must hallmark the metals and their trading must be conducted through manufacturers, traders or other entities that have obtained the necessary approvals for such activities. The ownership of the metals must be established and not subject to any legal dispute.

The investment policy included in the prospectus or information memorandum, as the case may be, must specify the type of metals eligible for investment, the nature of the revenues targeted from such investment, the minimum liquidity ratio to be maintained to meet the fund’s obligations and the dividend distribution policy.

The Authority stressed that, in all instances, the risks associated with this type of investment and their mitigation strategies must be disclosed. FRA also emphasized the necessity of insuring the fund’s assets with an Authority-licensed entity.

• Decree No. 50 of 2023 requires the fund’s investment managers to execute all metal buying and selling transactions exclusively through entities registered in the Authority’s register. Furthermore, they are required to contract with custodians listed in the Authority’s register.
• Decree no. 51 of 2023 governs listing and delisting of precious metal custody service providers as transferable securities within the Authority’s Register.

This decree mandates that such entities must adopt a corporate structure as defined in the Law on Joint Stock Companies, Limited Partnerships by Shares, Limited Liability Companies and Single-Person Companies. Furthermore, their core objectives must include the transfer and custody of funds and metals, they must have obtained all necessary approvals from relevant Egyptian authorities to offer precious metal custody services, possess the technical and technological infrastructure as determined by FRA and maintain secure and suitable precious metal custody facilities for service provision.

• Decree No. 52 of 2023 establishes the conditions for entities authorized to engage in metal trading with investment funds within the Authority’s Registers, including the requirement to adopt a corporate structure as defined in the Law on Joint Stock Companies, Limited Partnerships by Shares, Limited Liability Companies, and Single-Person Companies and to maintain capital not less than the minimum threshold determined by the Authority’s Board of Directors (set at a minimum of five million Egyptian pounds).

The decree requires the entity to aim to buy and sell metals (with necessary licenses from authorities), have at least two years of relevant experience, and be a member of the Egyptian Commodities Exchange, registered with the Assay and Weights Department, or any other competent body approved by the Authority.

If the two-year experience requirement is not met, the entity’s issued and paid-up capital must be at least EGP 15 million and its shareholders’ equity must equal or exceed the paid-up capital.

The decree also mandated that precious metal custody service providers registered with the Authority submit an insurance policy, issued by an Authority-licensed insurer, covering risks such as fire, burglary, loss, damage, breach of trust and employee negligence or dereliction.

Legislative Impact:

The regulatory framework has led to the licensing of three exclusive gold investment funds, which have successfully drawn significant investor interest, evidenced by the participation of 200,000 citizens and a total investment of EGP 2.1 billion. These are the only entities with FRA’s authorization to publicly offer subscriptions for investment funds in precious metals, including gold. They are:

• AZ-Gold Fund by Azimut Company
• Al Ahly Financial Investments Management
• Beltone Evolve Gold Investment Fund (Sabayek).

Established by the 2014 Egyptian Constitution and Law No. 10 of 2009, the Financial Regulatory Authority (FRA) is an independent public legal entity mandated to regulate and supervise non-bank financial markets and instruments. This includes capital markets, futures exchanges, insurance and non-bank financing encompassing real estate finance, financial leasing, factoring, consumer finance and SME/microfinance. FRA aims to ensure the safety, stability, regulation and development of these markets, protect stakeholder rights and promote efficiency and transparency in their operations.