Regulatory Alerts2022-01-01
Circular No. 298/2022: Prudence and Caution
The Palestine Monetary Authority issued Circular No. 298/2022 requiring all Palestinian banks to implement strict internal controls and compliance measures to combat illegal loan brokerage practices where third parties charge borrowers unauthorized fees for facilitating financing approvals. The directive mandates that banks proactively educate clients via social media and official digital channels to avoid paying such commissions, while simultaneously establishing electronic safeguards to prevent any business relationships with these brokers. Banks are further required to immediately report any discovered brokerage violations or related misconduct to the Authority’s Anti-Money Laundering and Combating the Financing of Terrorism Department through the designated official email address.
Palestine Monetary Authority PALESTINE MONETARY AUTHORITY
Circular No. (298/2022) To all banks operating in Palestine Date: Tuesday, December 06, 2022
Subject: Prudence and Caution
The Palestine Monetary Authority urges banks to exercise prudence and caution regarding certain individuals soliciting new clients to obtain banking facilities and financing in exchange for borrowers paying a portion of the loan to brokers as fees or commissions, in return for facilitating the borrower's approval process. In order to safeguard the stability and soundness of the banking sector, prevent it from being exposed to risks, and protect clients from falling victim to such unprofessional practices, we emphasize the necessity of the following:
- Take all necessary measures, decisions, and precautions to combat the phenomenon of brokerage related to client solicitation for financing purposes, highlight the dangers of dealing with such brokers, and clarify the administrative and legal penalties that may be imposed on violating employees.
- Educate clients via social media platforms against resorting to brokers to obtain loans and facilities, warn them against paying any amounts or fees to them for facilitating the borrowing process, and emphasize that applications for financial and banking services and products must be submitted by visiting branches and offices or through the bank's approved and reliable electronic channels and applications.
- Establish electronic arrangements and controls to ensure no business relationships are established or continued with loan and facility brokers, nor are any financial or banking services provided to them.
- Report to the Palestine Monetary Authority the measures and corrective actions taken upon discovering any violations or learning of brokerage activities, via the approved email address of the Anti-Money Laundering and Combating the Financing of Terrorism Department: AML-CFT@pma.ps.
Supervision Group Palestine Monetary Authority