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The Central Bank of the United Arab Emirates said Saturday it has ordered an urgent inspection of Banque Misr's branches in the country, after United States authorities proposed restricting the Egyptian lender's UAE branch from dollar correspondent banking services, the state news agency WAM reported.
The regulator said the review would examine in depth the period covered by the US notice, focusing in particular on transactions involving companies that American authorities have flagged over money laundering concerns.
According to the UAE central bank, examining anti-money laundering and counterterrorism financing controls, including the effectiveness of banks' sanctions-screening systems, is part of its routine oversight of financial institutions operating in the country.
It said Banque Misr's UAE branches remain subject to UAE law and regulation, and that licensed banks must not expose the UAE's financial system to reputational risk or fail to comply with the laws of countries whose institutions process their transactions.
The central bank added that it is weighing its options regarding Banque Misr should the proposed US measure become final once legal procedures are complete, and said any decision it takes would account for the bank's obligations to its customers in the UAE.
The move follows an announcement by the US Treasury Department's Financial Crimes Enforcement Network, which last week proposed a rule that would revoke Banque Misr UAE's access to correspondent banking with US financial institutions.
Treasury said the action, taken as part of what it has called Operation Economic Outcast, targeted transactions it linked to Iranian shadow-banking networks, and that the proposal is subject to a 30-day public comment period before any final rule is issued.
Banque Misr said the US measure remains a proposed regulatory action subject to a formal comment and review period before any final decision is made.
It said it was treating the information and assessments contained in the US notice "with the utmost seriousness" and would seek further details from the Treasury Department before submitting its response within the prescribed timeframe.
The bank emphasized that the proposed restriction applies only to its UAE branch and does not extend to its operations in Egypt or in other countries where it operates.
It said its UAE branch continues to provide banking services under existing rules, while reaffirming what it described as the strength of its financial position and its commitment to meeting obligations to customers and other stakeholders.
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Egypt's central bank, in a separate statement, said the potential US measure concerns transactions between Banque Misr's UAE branch and dollar correspondent banks and does not affect the lender's operations inside Egypt or its branches in other countries.
Banque Misr is Egypt's second-largest bank, and any disruption to its international operations has drawn close attention from regulators in both Cairo and Abu Dhabi as they seek to reassure markets that the impact will remain confined to the branch named in the US notice.
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