Decree-Law No. 40 of 2022 Concerning the Licensing and Regulation of the Money Exchange Profession

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

Decree-Law No. (40) of the Year 2022 Concerning the Licensing and Regulation of the Money Exchange Profession

President of the State of Palestine Chairman of the Executive Committee of the PLO

Based on the Basic Statute of the Palestine Liberation Organization, and the Basic Law of 2003 and its amendments, and after reviewing Law No. (2) of 1997 concerning the Palestinian Monetary Authority and its amendments, and Decree-Law No. (42) of 2021 concerning companies, and Decree-Law No. (39) of 2022 concerning combating money laundering and terrorist financing, and Presidential Decision No. (41) of 2016 concerning the licensing and regulation of the money exchange profession, and the letter from the Palestinian Monetary Authority dated 2022/07/20, and based on the powers vested in us, and in pursuit of the public interest, we have issued the following Decree-Law:

Chapter One Definitions and General Provisions

Article (1) Definitions The words and expressions used in this Decree-Law shall carry the meanings specified below, unless the context indicates otherwise:

• Authority: The Palestinian Monetary Authority.
• Governor: The Governor of the Authority.
• Board: The Board of Directors of the Authority.
• Person: A natural or legal person.
• Money Exchanger: A natural or legal person licensed by the Authority to conduct money exchange activities under the provisions of this Decree-Law.
• Applicant: The person who has submitted an application to the Authority for a license to conduct money exchange activities.
• Money Exchange Activities: The activities specified in Article (9) of this Decree-Law.
• 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 maintains a business relationship.

Article (2) Objectives and Scope of Application

1. This Decree-Law aims to regulate money exchange activities and preserve the integrity, effectiveness, and stability of the financial and monetary system.
2. The provisions of this Decree-Law 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 Authority.
2. Any person wishing to conduct money exchange activities must submit a license application to the Authority in accordance with the instructions issued by the Authority on this matter.
3. No new person wishing to conduct money exchange activities shall be granted a license by the Authority except through a company registered in accordance with 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 Authority.
5. The 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 "exchange" or its synonyms or any other similar expression in any language in their documents, publications, or trade name, unless they hold a license or prior approval from the Authority.
7. The 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 the Authority.
8. The Authority may request any person to provide their 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 Authority shall respond in writing to the applicant within (30) days from the date of receiving the application regarding its completeness, specifying the deficiencies that must be provided for the Authority to review 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 Authority shall issue a written decision within (30) days from the date of application completion. The decision shall be reasoned in case of rejection.
4. In case of approval, the Authority shall grant the applicant a period of (6) months to complete the procedures and requirements for final approval. The Authority may extend this period by an additional (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 fails to 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 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 to conduct their activities does not commence operations within the periods specified in paragraphs (5) and (7) of this Article.

Article (5) Renewal of License The Authority shall issue the necessary instructions for license renewal.

Article (6) Exclusivity, Transfer, and Closure The Authority shall issue the necessary instructions regarding exclusivity, transfer, and closure.

Article (7) Register of Money Exchangers

1. The Authority shall maintain a central register of all money exchangers.
2. The Authority shall publish a list of money exchangers on its website.

Article (8) Fees, Cash Deposits, and Service Charges

1. The Authority shall collect the following fees from money exchangers:
   • Application fee.
   • One-time license fee upon issuance.
   • Annual license fee for the headquarters and branches.
   • The Authority may collect a financial charge for any services provided to the Money Exchanger, as determined by instructions issued by the Authority for this purpose.
2. The application 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 license or new branches issued during the year shall be calculated based on a percentage of the number of months in 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 a portion thereof if they suspend operations in accordance with this Decree-Law.
6. The Authority shall issue instructions specifying the fees mentioned in paragraph (1) of this Article.
7. The 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 Authority through instructions issued for this purpose.
2. Without prejudice 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 Authority through instructions issued for this purpose.

Article (10) Prohibited Activities Without prejudice to Article (9) of this Decree-Law, the Money Exchanger is 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 Money Exchangers

Article (11) Memorandum and Articles of Association Upon registration of a money exchange company, prior written approval from the Authority must be obtained for the draft Memorandum and Articles of Association. No amendments shall be made to them without prior written approval from the 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 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 Holidays The 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 their employees must maintain the confidentiality of information and documents related to clients obtained through 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 through their profession, position, or work, directly or indirectly, unless such access is based on the following:
   • Written consent of the client.
   • A court order issued by a competent court.
2. The following cases are exempt from the confidentiality requirements in paragraph (1) of this Article, with these parties remaining bound by confidentiality requirements for the information they obtain:
   • Disclosure of information and documents requested by the Authority or its employees performing their duties.
   • Disclosure to fulfill legal obligations of the external auditor under this Decree-Law.
   • Disclosure to fulfill obligations specified for legal advisors.
   • Specific disclosure of information under the provisions of the Anti-Money Laundering and Terrorist Financing Law and its issued instructions.
   • Disclosure by the Money Exchanger of some or all information related to client transactions to provide evidence in ongoing litigation between them regarding these transactions.
   • Chairs of the boards of directors of money exchange companies wishing to merge or acquire under this Decree-Law, or those specially authorized for this purpose, may exchange necessary information regarding their companies' operations to complete merger or acquisition studies, provided they obtain prior written approval from the Authority. These persons shall be personally responsible for maintaining the confidentiality of information accessed in this regard, under legal liability.
3. The 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 their operations, in accordance with instructions issued by the Authority.
2. Each Money Exchanger must maintain, at all times, the minimum capital level as per instructions issued by the Authority.
3. The Money Exchanger is prohibited from reducing or increasing capital without prior written approval from the Authority.
4. The Authority shall issue instructions necessary to regulate the mechanism for handling profits and reserves.

Chapter Six Combating Money Laundering and Terrorist Financing

Article (16) Combating Money Laundering and Terrorist Financing

1. Without prejudice to the provisions of the prevailing Anti-Money Laundering and Terrorist Financing Law, any Money Exchanger is prohibited from concealing money transfer operations or any other operations while knowing that these funds originate from illegal activities, in order to conceal their source or assist 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 objective and factual 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 assets originate from illegal activities, along with any additional information requested regarding these activities, in accordance with the prevailing Anti-Money Laundering and Terrorist Financing Law.
4. The Authority shall issue instructions related to combating money laundering and terrorist financing concerning the licensing and regulation 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 and Accounting Systems

1. The Money Exchanger must maintain their financial and accounting records in accordance with instructions issued by the Authority for this purpose.
2. The Money Exchanger must operate in accordance with financial and accounting systems as per instructions issued by the Authority for this purpose.

Article (19) Internal and External Audit

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

Article (20) Reports to the Authority

1. The Money Exchanger must provide the Authority with data, information, and reports related to their activities periodically, in accordance with instructions issued by the Authority for this purpose.
2. The Money Exchanger must send copies of audited financial statements to the Authority in accordance with instructions issued by the Authority.
3. The 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 Authority shall determine the following through instructions issued by it:

1. Regulating the liquidation process in accordance with the prevailing Companies Law and any other applicable legislation in the State.
2. Regulating mergers, acquisitions, and ownership transfers of money exchange companies.
3. Liquidity, its caps, 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 Authority.
7. Security requirements.
8. Any risks the Money Exchanger may face.

Chapter Nine Inspection and Supervision

Article (22) Inspection

1. The Authority may appoint one or more inspectors to inspect the Money Exchanger or any of their 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 this Decree-Law and its issued instructions.
   • 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 Authority requirements.
   • Verifying the availability of policies, standards, and work procedures that ensure money exchange activities are conducted properly, their compliance, and their updating to keep pace with developments in the work environment.
2. The Money Exchanger must provide inspectors appointed by the Authority for examination and inspection with all requested books, records, accounts, documents, and any additional requirements necessary to complete the examination and inspection process.
3. Authority employees appointed for supervision and inspection shall have the status of judicial police officers within their jurisdiction.

Chapter Ten Violations, Corrective Measures, and Fines

Article (23) Violations and Corrective Measures

1. If the Authority establishes that a Money Exchanger has violated the provisions of this Decree-Law or instructions issued thereunder, it may take one or more of the following measures:
   • Issue a notice to rectify and correct the violation.
   • Issue a decision to immediately cease the violation and take urgent corrective measures.
   • Oblige the Money Exchanger to submit a corrective timeline for intended actions or a detailed description of actions taken to rectify violations and correct their status.
   • Refuse branch applications.
   • Impose financial fines in accordance with this Decree-Law.
   • Temporarily close the Money Exchanger.
   • Revoke the Money Exchanger's license and remove them from the Register of Money Exchangers in accordance with this Decree-Law.
2. The Authority shall issue instructions specifying corrective measures for the Money Exchanger.
3. If any measures stipulated in this Article are determined, 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 Decree-Law, 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 Authority may take necessary measures and procedures to identify any person conducting money exchange activities, acting as an intermediary or agent, or transferring money or value without obtaining the necessary approvals and licenses in accordance with this Decree-Law and its issued instructions.
3. Any natural person conducting money exchange activities, acting as an intermediary or agent, or transferring money or value without obtaining the necessary approvals and licenses in accordance with this Decree-Law and its issued instructions 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 or agent, or transferring money or value without obtaining the necessary approvals and licenses in accordance with this Decree-Law and its issued instructions shall be punished 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 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) Cancellation of License The Authority may cancel the Money Exchanger's license in any of the following cases:

1. If the Money Exchanger obtained the license based on incorrect information.
2. If the Money Exchanger fails to commence operations within the period specified in Article (4) of this Decree-Law.
3. If the Money Exchanger makes changes affecting the nature of their licensed activity in violation of the license conditions.
4. If the Money Exchanger declares bankruptcy or a liquidation decision is issued against them.
5. If the money exchange company merges, or its ownership or part of its ownership is transferred to another company without prior approval from the Authority.
6. If the Money Exchanger suspends operations for a period exceeding (3) months without justified cause.
7. If the Money Exchanger repeatedly fails to comply with this Decree-Law and its issued instructions.
8. If the Money Exchanger requests it.
9. If the Money Exchanger, as an individual, dies.
10. If the Money Exchanger, as an individual, is convicted by a competent court of a crime involving honor and integrity.

Article (26) Instructions The Authority shall issue the necessary instructions and circulars to implement the provisions of this Decree-Law.

Article (27) Repeal

1. Instructions, decisions, and circulars issued by the Authority under Decision No. (41) of 2016 concerning the licensing and regulation of the money exchange profession shall remain valid to the extent they do not conflict with the provisions of this Decree-Law, until amended, repealed, or replaced by instructions and circulars issued under this Decree-Law.
2. Decision No. (41) of 2016 concerning the licensing and regulation of the money exchange profession is repealed.
3. Anything conflicting with the provisions of this Decree-Law is repealed.

Article (28) Entry into Force All competent authorities shall implement the provisions of this Decree-Law according to their respective jurisdictions. It shall be enforced from the date of its publication in the Official Gazette.

Issued in Ramallah on: 2022/08/08 Gregorian Corresponding to: 10 Muharram 1444 Hijri

Mahmoud Abbas President of the State of Palestine Chairman of the Executive Committee of the PLO