mjr.lab.pna.ps Official Gazette Office | Reference No: 193-8-2022 Issue No. 193 | Date: 2022/08/14

Law No. (40) of 2022

Concerning the Licensing and Supervision of the Money Exchange Profession

President of the State of Palestine Chairman of the Executive Committee of the Palestine Liberation Organization

Based on the Basic Law of the Palestine Liberation Organization, and the Amended Basic Law of 2003 and its amendments, after reviewing Law No. (2) of 1997 concerning the Palestinian Monetary Authority and its amendments, and Law Decree No. (42) of 2021 concerning Companies, and Law Decree No. (39) of 2022 concerning Combating Money Laundering and Terrorist Financing, and Presidential Decision No. (41) of 2016 concerning the System for Licensing and Supervising the Money Exchange Profession, and the letter from the Palestinian Monetary Authority dated 2022/07/20, and based on the powers delegated to us, and in pursuit of the public interest, we have issued the following Law Decree:

Chapter One: Definitions and General Provisions

Article (1): Definitions

The words and expressions used in this Law Decree shall have the meanings specified below, unless the context indicates otherwise:

• Monetary Authority: The Palestinian Monetary Authority.
• Governor: The Governor of the Monetary Authority.
• Board: The Board of Directors of the Monetary Authority.
• Person: A natural or legal person.
• Money Exchanger: A natural or legal person licensed by the Monetary Authority to conduct money exchange activities under the provisions of this Law Decree.
• Applicant: The person who submits a license application to the Monetary Authority to conduct money exchange activities.
• Money Exchange Activities: The activities specified in Article (9) of this Law Decree.
• Branch: A workplace that constitutes a legally subordinate part of the Money Exchanger, where all or some of the money exchange activities are conducted.
• Correspondent Company: A money exchange company or bank operating outside Palestine with which the Money Exchanger conducts business.

Article (2): Objectives of the Law Decree and Scope of Application

1. This Law Decree aims to regulate money exchange activities and preserve the integrity, effectiveness, and stability of the financial and monetary system.
2. The provisions of this Law Decree shall apply to all Money Exchangers in accordance with the stipulations herein.

Chapter Two: Licensing Provisions

Article (3): Licensing

1. No person shall conduct money exchange activities without obtaining a license from the Monetary Authority.
2. Any person wishing to conduct money exchange activities must submit a license application to the Monetary Authority in accordance with the instructions issued by it on this matter.
3. No new person wishing to conduct money exchange activities shall be granted a license by the Monetary Authority except through a company registered under the prevailing Companies Law.
4. No new company shall be registered with the Companies Registrar if its purpose is to conduct money exchange activities, except after obtaining prior written approval from the Monetary Authority.
5. The Monetary Authority may classify Money Exchangers into categories according to risk size, in accordance with instructions issued for this purpose.
6. No person shall use the word "money exchange" or its synonyms or any similar expression in any language in their documents, publications, or trade name, unless they hold a license or prior approval from the Monetary Authority.
7. The Monetary Authority may request competent authorities to take the necessary legal action against any person found to be conducting money exchange activities without prior licensing from it.
8. The Monetary Authority may request any person to provide its books, documents, and accounts if there is suspicion that they are conducting money exchange activities without the necessary license.

Article (4): Licensing Procedures

1. The Monetary Authority shall respond in writing to the applicant within (30) days from the date of receiving the application regarding the completeness of the application, specifying the deficiencies that must be provided for the Monetary Authority to consider the application.
2. Deficiencies must be completed within (60) days from the date of the response; otherwise, the license application shall be deemed withdrawn.
3. The Monetary Authority shall issue a written decision within (30) days from the date of application completeness. The decision shall be reasoned in case of rejection.
4. In case of approval, the Monetary Authority shall grant the applicant a period of (6) months to complete the procedures and requirements for final approval. The Monetary Authority may extend this period by another (6) months. Approval shall be automatically revoked if the procedures and requirements are not completed within the granted period.
5. The Money Exchanger must commence operations within a maximum period of (90) days from the date of final approval.
6. If the Money Exchanger does not commence operations within the period specified in paragraph (5) of this Article, they may submit a letter explaining the reasons that prevented them from commencing work.
7. If the Monetary Authority accepts the reasons stated in the Money Exchanger's letter, it may extend the period by (30) days, which is non-renewable.
8. The license shall be automatically revoked if the Money Exchanger who received final approval does not commence operations within the periods specified in paragraphs (5) and (7) of this Article.

Article (5): License Renewal

The Monetary Authority shall issue the necessary instructions for license renewal.

Article (6): Exclusivity, Transfer, and Closure

The Monetary Authority shall issue the necessary instructions regarding exclusivity, transfer, and closure.

Article (7): Money Exchangers Register

1. The Monetary Authority shall maintain a central register of all Money Exchangers.
2. The Monetary Authority shall publish a list of Money Exchangers on its website.

Article (8): Fees, Cash Deposits, and Service Allowances

1. The Monetary Authority shall collect the following fees from Money Exchangers:
   • Application submission fee.
   • One-time license fee upon issuance.
   • Annual license fee for the head office and branches. The Monetary Authority may collect a financial allowance for any services provided to the Money Exchanger, determined by instructions issued for this purpose.
2. The application submission fee shall be paid when submitting a new license or branch application.
3. The annual license fee shall be paid at the beginning of the Gregorian calendar year, no later than January 31 of each year.
4. The annual license fee for a new Money Exchanger or new branches granted during the year shall be calculated on a pro-rata basis according to the number of months of the year, starting from the date of license issuance. Fractions of a month shall be considered a full month for fee calculation purposes.
5. The Board may exempt a Money Exchanger from the annual license fee or part of it if they cease operations in accordance with this Law Decree.
6. The Monetary Authority shall issue instructions specifying the fees mentioned in paragraph (1) of this Article.
7. The Monetary Authority may collect a cash deposit from the Money Exchanger in accordance with instructions issued for this purpose.

Chapter Three: Permitted and Prohibited Activities

Article (9): Permitted Activities

1. The Money Exchanger may conduct the activities mentioned in paragraph (2) of this Article, subject to the conditions and requirements determined by the Monetary Authority through instructions issued for this purpose.
2. Subject to paragraph (1) of this Article, the Money Exchanger may conduct the following activities:
   • Buying and selling various currencies.
   • Buying and selling unprocessed precious metals.
   • Opening and using accounts in various currencies with correspondent companies.
   • Issuing and accepting drafts within Palestine.
   • Issuing and accepting drafts outside Palestine.
   • Any other financial activity permitted by the Monetary Authority through instructions issued for this purpose.

Article (10): Prohibited Activities

Subject to Article (9) of this Law Decree, Money Exchangers are prohibited from conducting the following activities:

1. Opening accounts for their clients or accepting deposits or trusts of any kind or precious metals.
2. Providing loans, facilities, or direct or indirect financing.
3. Speculating on currency and precious metal prices in a manner that may harm financial or monetary stability or the public interest.

Chapter Four: Management of the Money Exchanger

Article (11): Memorandum of Association and Internal Bylaws

Upon registration of a money exchange company, prior written approval from the Monetary Authority must be obtained for the draft Memorandum of Association and Internal Bylaws. No amendments shall be made to them without prior written approval from the Monetary Authority.

Article (12): Policies and Internal Systems

1. The Money Exchanger must establish internal policies, systems, and procedures to ensure proper operations.
2. The Money Exchanger must periodically review internal policies, systems, and procedures.
3. The Monetary Authority may determine the requirements and conditions for employees of the Money Exchanger in accordance with instructions issued for this purpose.

Article (13): Working Hours and Official/Holiday Days

The Monetary Authority shall determine working hours and official and religious holidays through circulars issued by it.

Article (14): Confidentiality Requirements

1. The Money Exchanger and all its employees must maintain the confidentiality of information and documents related to clients obtained in the course of their duties. None of them shall disclose any such information or allow others to access it. This prohibition applies to anyone who gains access to such data and information directly or indirectly by virtue of their profession, position, or employment, unless such access is pursuant to the following:
   • Written consent of the client.
   • A ruling issued by a competent court.
2. The following cases are exempt from the confidentiality requirements in paragraph (1) of this Article, provided that these parties remain bound by confidentiality requirements for the information they obtain:
   • Disclosure of information and documents requested by the Monetary Authority or its employees tasked with performing their duties.
   • Disclosure to fulfill the legal duties of the external auditor as stipulated in this Law Decree.
   • Disclosure to fulfill duties specified for legal advisors.
   • Specific disclosure of information in accordance with the provisions of the prevailing Law on Combating Money Laundering and Terrorist Financing and instructions issued thereunder.
   • Disclosure by the Money Exchanger of some or all information related to client transactions to provide evidence in ongoing legal proceedings between them regarding these transactions.
   • Chairmen of the boards of directors of money exchange companies wishing to merge or acquire under the provisions of this Law Decree, or those specially authorized for this purpose, may exchange necessary information regarding their companies' operations to complete the merger or acquisition study, provided they obtain prior written approval from the Monetary Authority. These individuals shall be personally responsible for maintaining the confidentiality of the information they access in this regard, under legal liability.
3. The Monetary Authority shall determine instructions governing the confidentiality of data related to the Money Exchanger.

Chapter Five: Capital, Profits, and Reserves

Article (15): Capital, Profits, and Reserves

1. Each Money Exchanger must maintain capital commensurate with the nature and volume of its operations, in accordance with instructions issued by the Monetary Authority.
2. Each Money Exchanger must maintain, at all times, the minimum capital level, in accordance with instructions issued by the Monetary Authority.
3. The Money Exchanger is prohibited from reducing or increasing capital without obtaining prior written approval from the Monetary Authority.
4. The Monetary Authority shall issue instructions necessary to regulate the mechanism for dealing with profits and reserves.

Chapter Six: Combating Money Laundering and Terrorist Financing

Article (16): Combating Money Laundering and Terrorist Financing

1. Subject to the provisions of the prevailing Law on Combating Money Laundering and Terrorist Financing, no Money Exchanger shall conceal money transfer operations or any other operations while knowing that these funds originate from illegal activities, for the purpose of concealing their source or assisting any person involved in these activities to avoid legal prosecution.
2. The "knowledge" referred to in paragraph (1) of this Article means knowledge that can be inferred from realistic and objective circumstances.
3. The Money Exchanger must notify the Financial Intelligence Unit and provide it with suspicion reports and any evidence proving that these funds or properties originate from illegal activities, along with any additional information requested regarding these activities, in compliance with the requirements of the prevailing Law on Combating Money Laundering and Terrorist Financing.
4. The Monetary Authority shall issue instructions related to combating money laundering and terrorist financing concerning the licensing and supervision of the money exchange profession.

Chapter Seven: Accounts and Reports

Article (17): Financial Year

The financial year of the Money Exchanger begins on January 1 and ends on December 31 of each Gregorian calendar year.

Article (18): Financial Statements and Accounting Systems

1. The Money Exchanger must organize its financial and accounting records in accordance with instructions issued by the Monetary Authority for this purpose.
2. The Money Exchanger must operate according to financial and accounting systems in accordance with instructions issued by the Monetary Authority for this purpose.

Article (19): Internal and External Auditing

1. The Monetary Authority shall determine the internal auditing requirements for the Money Exchanger through instructions issued for this purpose.
2. The Money Exchanger must appoint a statutory auditor to audit and review its annual accounts in accordance with instructions issued by the Monetary Authority for this purpose.

Article (20): Reports Submitted to the Monetary Authority

1. The Money Exchanger must provide the Monetary Authority with data, information, and reports related to its activities periodically, in accordance with instructions issued by the Monetary Authority for this purpose.
2. The Money Exchanger must send copies of audited financial statements to the Monetary Authority in accordance with instructions issued by the Monetary Authority.
3. The Monetary Authority may request the Money Exchanger to answer any inquiries during the period it determines.

Chapter Eight: Other Controls and Requirements

Article (21): Other Controls and Requirements

The Monetary Authority shall determine through issued instructions the following:

1. Regulating the liquidation process in accordance with the prevailing Companies Law and any other relevant legislation in force in the State.
2. Regulating merger, acquisition, and ownership operations for money exchange companies.
3. Liquidity, its ceilings, ratios, and calculation mechanism.
4. Currencies and fees.
5. Public awareness, fair treatment of customers, and mechanisms for handling citizen complaints.
6. Mechanism for exchanging correspondence with the Monetary Authority.
7. Security requirements.
8. Any risks the Money Exchanger may face.

Chapter Nine: Inspection and Supervision

Article (22): Inspection

1. The Monetary Authority may appoint one or more inspectors to inspect the Money Exchanger or any of its branches at any time to examine books, records, automated systems, and financial data. Inspection shall cover any of the following:
   • Verifying the integrity of the financial position, capital adequacy, asset quality, effectiveness and risks of operations, management evaluation, service quality, and liquidity availability to meet operational requirements.
   • Evaluating internal control performance and compliance with the provisions of this Law Decree and instructions issued thereunder.
   • Verifying the integrity and efficiency of used automated systems, availability of dual control and segregation of duties, adequacy and accuracy of their outputs, and their compliance with operational needs and Monetary Authority requirements.
   • Verifying the availability of policies, standards, and work procedures that ensure the proper execution of money exchange activities, compliance with them, and their updating to keep pace with developments in the work environment.
2. The Money Exchanger must provide Monetary Authority inspectors tasked with examination and inspection with all requested books, records, accounts, documents, and any other requirements necessary to complete the examination and inspection process.
3. Monetary Authority employees tasked with supervision and inspection shall, within their jurisdiction, have the status of judicial police officers.

Chapter Ten: Violations, Corrective Measures, and Fines

Article (23): Violations and Corrective Measures

1. If the Monetary Authority establishes that a Money Exchanger has violated the provisions of this Law Decree or instructions issued thereunder, it may take one or more of the following measures:
   • Issuing a notice to rectify and correct the violation.
   • Issuing a decision to immediately cease the violation and take urgent corrective measures.
   • Compelling the Money Exchanger to submit a corrective timeline for intended measures or a detailed description of measures taken to rectify violations and regularize its status.
   • Rejecting branch applications.
   • Imposing financial fines in accordance with this Law Decree.
   • Temporarily closing the Money Exchanger.
   • Revoking the Money Exchanger's license and removing it from the Money Exchangers Register in accordance with this Law Decree.
2. The Monetary Authority shall issue instructions specifying corrective measures for the Money Exchanger.
3. If any measures stipulated in this Article are decided, it shall not waive civil and criminal liability in accordance with any other legislation.

Article (24): Imposition of Fines and Penalties

1. Any Money Exchanger violating the provisions of this Law Decree, regulations, instructions, and circulars issued thereunder shall be penalized with a financial fine not less than (100) one hundred US dollars and not exceeding (10,000) ten thousand US dollars, or its equivalent in the legally circulating currency.
2. The Monetary Authority may take the necessary measures and procedures to identify any person conducting money exchange activities, acting as an intermediary, working as an agent, or transferring money or value without obtaining the necessary approvals and licenses in accordance with this Law Decree and instructions issued thereunder.
3. Any natural person conducting money exchange activities, acting as an intermediary, working as an agent, or transferring money or value without obtaining the necessary approvals and licenses in accordance with this Law Decree and instructions issued thereunder shall be punished with imprisonment for a period not exceeding one year, or a financial fine not less than (2,000) two thousand US dollars and not exceeding (15,000) fifteen thousand US dollars, or its equivalent in the legally circulating currency, or both penalties.
4. Any legal person conducting money exchange activities, acting as an intermediary, working as an agent, or transferring money or value without obtaining the necessary approvals and licenses in accordance with this Law Decree and instructions issued thereunder shall be penalized with a financial fine not less than (10,000) ten thousand US dollars and not exceeding (50,000) fifty thousand US dollars, or its equivalent in the legally circulating currency, or both penalties.
5. Anyone conducting money exchange activities and operations without obtaining the necessary approvals and licenses shall be referred to the Public Prosecutor to take legal action in accordance with this Article.

Article (25): License Revocation

The Monetary Authority may revoke the license of a Money Exchanger in any of the following cases:

1. If the Money Exchanger obtained the license based on false information.
2. If the Money Exchanger did not commence operations within the period specified in Article (4) of this Law Decree.
3. If the Money Exchanger made changes affecting the nature of its licensed activity in