Regulatory Alerts2019-01-01
Circular No. 143: Exercise Caution Regarding a Criminal Fraud Method
The Palestine Monetary Authority issued Circular No. 143 mandating all Palestinian banks to implement enhanced preventive controls and supervisory mechanisms to mitigate fraud risks associated with electronic banking applications. The directive requires institutions to conduct pre-launch risk assessments, patch technological vulnerabilities, restrict simultaneous multi-app transactions, enforce daily transfer limits, and implement real-time SMS alerts and anti-money laundering monitoring. Banks must also immediately report suspected incidents to the Authority and the Financial Follow-up Unit while securing comprehensive insurance coverage for these specific cyber and operational risks.
Palestine Monetary Authority
PALESTINE MONETARY AUTHORITY
Circular No. (2019/193) To all banks operating in Palestine Date: Thursday, May 30, 2019
Subject: Exercise Caution Regarding a Criminal Fraud Method
The Palestine Monetary Authority urges banks to take precautionary measures and adopt preventive procedures and controls sufficient to avoid the criminal method used by one of the banks operating in a neighboring country, which consists of defrauding the bank using electronic applications. Based on the bulletin issued by Internet Banking and Mobile Banking regarding this method, it specifically involves exploiting time and value to transfer funds from the main account to sub-accounts, followed by external withdrawals, resulting in each financial transaction being executed and its amount recorded on the customer's bank account twice.
In order to ensure the safety and stability of the banking sector, combat money laundering and terrorist financing crimes, and mitigate any potential risks arising from exposure to such criminal methods, the Palestine Monetary Authority emphasizes the necessity of adhering to the following minimum requirements:
- Assess the risks of electronic application products and fraud risks prior to launching, modifying, or updating such products.
- Work on examining current electronic applications and addressing any technological vulnerabilities that could provide opportunities for fraudsters and hackers to commit criminal acts in the future.
- Establish necessary supervisory mechanisms and controls to halt the execution of financial transactions on customer accounts when using multiple electronic applications simultaneously.
- Establish supervisory and automated mechanisms to prevent the exposure of a customer's bank account details for the purpose of executing financial transfers via electronic applications.
- Monitor financial transactions executed via electronic applications and subject them to anti-money laundering and counter-terrorist financing programs.
- Set a daily limit on the execution of financial transactions using electronic applications.
- Send SMS notifications to customers upon the execution of financial transactions.
- Notify the Palestine Monetary Authority, the Financial Follow-up Unit, and relevant authorities immediately upon discovering such incidents.
- Insure against this type of risk under the bank's comprehensive insurance policy.
Supervision and Inspection Department Palestine Monetary Authority
Copy: To: The Honorable Financial Follow-up Unit
Note: Ramallah & Al-Bireh Governorate - Palestine P.O. Box 452 info@pma.ps | Fax: +970 2 2415310 | Tel: +970 2 2415251 Gaza - Palestine P.O. Box 4026 Fax: +970 8 2844487 | Tel: +970 8 2825713 www.pma.ps