Palestine Monetary Authority

PALESTINE MONETARY AUTHORITY

Instruction No. (3) of 2021

Regarding the Purchase of Post-Dated Cheques by Money Exchange Companies

Based on the provisions of Decision No. (41) of 2016 on the Licensing and Supervision of the Money Exchange Profession, particularly Article (9) thereof,

In accordance with the powers delegated to us,

And in pursuit of the public interest,

We have issued the following Instructions:

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(1) Article

Definitions

The words and phrases appearing in these Instructions shall have the meanings assigned to them below, unless the context indicates otherwise:

Post-Dated Cheque: Any cheque that is payable on a date subsequent to the date of purchase by the money exchange company.

Beneficiary: A natural or legal person.

Related Parties: Any person who has any of the following relationships with the money exchange company:

1. Holding a significant share of 10% or more of the money exchange company's capital.
2. Being a member of the board of directors of the money exchange company or an executive therein.
3. Being a first or second-degree relative of any person who holds a significant share in the money exchange company or is a member of its board of directors or an executive therein.
4. Being a consultant to the money exchange company.
5. The external auditor of the money exchange company.

First-Degree Relatives: The father, mother, son, and daughter. Relatives of one spouse of the same degree and kinship are considered relatives of the other spouse.

Second-Degree Relatives: Grandfather, grandmother, brothers, sisters, and grandchildren. Relatives of one spouse of the same degree and kinship are considered relatives of the other spouse.

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(2) Article

Objective and Scope of Application

1. These Instructions aim to regulate the process of purchasing post-dated cheques at money exchange companies to activate and enhance the economic cycle.
2. The provisions of these Instructions apply to all money exchange companies licensed by the Palestine Monetary Authority.

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(3) Article

Purchase of Post-Dated Cheques

A money exchange company may purchase post-dated cheques, subject to the following controls:

1. Obtaining prior written approval from the Palestine Monetary Authority by submitting a written request according to Annex No. (1), provided there are no fundamental supervisory notes against the money exchange company.
2. Qualifying the accounting system used by the money exchange company to record all post-dated cheque purchase operations, including the basic data of the cheque and the commission charged, and committing to send the cheque purchase report specified in the system, and retaining an electronic copy of all purchased post-dated cheques in the system.
3. Linking to the inquiry system for cheques drawn on banks licensed to operate in Palestine by the Palestine Monetary Authority.
4. The total sum of purchased post-dated cheques must not exceed 25% of the money exchange company's capital.
5. The post-dated cheque must be for the first beneficiary, and the purchase of bearer (order) post-dated cheques is prohibited.
6. The maturity date of the post-dated cheque must not exceed one year from the date of purchase.
7. The commission charged for purchasing the post-dated cheque must not exceed the limits specified below, and these limits must be displayed to the public in a prominent place in the company's headquarters and branches:

Maximum Commission as a Percentage of the Cheque Amount	Cheque Maturity Date
3%	Up to 3 months from the date of purchase
6%	From 3 months up to 6 months from the date of purchase
9%	More than 6 months from the date of purchase

8. The value of the post-dated cheque must be paid in the same currency as the cheque; otherwise, the written consent of the beneficiary must be obtained.
9. The money exchange company must deposit the purchased post-dated cheques in its account at the bank under "Cheques Deposited for Collection."

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(4) Article

Unpaid Due Cheques

1. The value of unpaid due cheques shall be deducted from the money exchange company's capital.
2. The money exchange company must provide the Palestine Monetary Authority with an annual report on unpaid due cheques according to Annex No. (2).
3. The money exchange company may replace an unpaid due cheque with another post-dated cheque only once, and in this case, the company may charge a commission on the new cheque according to the rates specified in Article (3) of these Instructions.

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(5) Article

Anti-Money Laundering and Counter-Terrorism Financing Requirements

Money exchange companies must comply with the provisions of the Anti-Money Laundering and Counter-Terrorism Financing Law in force in the State of Palestine and the instructions issued pursuant to it, as well as all instructions and circulars issued by the Palestine Monetary Authority regarding this matter, including the following:

1. Identifying and understanding the risks associated with practicing this activity and providing effective measures to mitigate risks, and working to enhance them in accordance with the level of risk.
2. Taking due diligence measures to identify and verify the beneficiary and the ultimate beneficial owners, and the purpose of the transaction.
3. Documenting the entire transaction, including the relationship between the beneficiary and the issuer of the cheque, and attaching supporting documents.

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(6) Article

Prohibitions

A money exchange company is prohibited from doing any of the following:

1. Charging any interest on purchased post-dated cheques.
2. Accepting any type of guarantee in exchange for purchasing post-dated cheques.
3. Purchasing post-dated cheques drawn on the beneficiary's own account.
4. Purchasing post-dated cheques from related parties of the money exchange company.

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(7) Article

Penalties

Anyone who violates the provisions of these Instructions shall be punished in accordance with the provisions of Decision No. (41) of 2016 on the Licensing and Supervision of the Money Exchange Profession, and/or under the Anti-Money Laundering and Counter-Terrorism Financing Law in force, as applicable.

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(8) Article

Repeal

1. Clause No. (3.1) of Article (Second / Permitted Activities for Money Exchangers) of Instruction No. (2011/3) issued on 20/12/2011 regarding Permitted and Prohibited Activities is repealed.
2. Anything inconsistent with the provisions of these Instructions is repealed.

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(9) Article

Implementation and Entry into Force

All competent authorities shall implement the provisions of these Instructions, each within its respective jurisdiction. These Instructions shall apply from the date of their issuance.

Issued in Ramallah: On 8/11/2021.

Dr. Fares Malkawi Governor

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Annex No. (1)

Application Form for Approval to Conduct the Activity of Purchasing Post-Dated Cheques

First: Basic Data

Partners' Data
	Company Name	Company Capital	Company Bank Account Number	Bank Name	Company Activities
					And indicate the following company activities currently:
					- Buying and Selling Currencies
					- Domestic Transfers
					- International Transfers
					- Fast Transfers (Principal Agent)
					- Fast Transfers (Sub-Agent)
					- Electronic Payment Services Agent