Regulatory Alerts2022-01-01
Lending 2022 Circular No. 299 Prudence and Caution
The Palestine Monetary Authority issued Circular No. 299/2022 requiring all specialized lending institutions in Palestine to exercise strict prudence and caution against third-party brokers soliciting clients for loan facilitation in exchange for unauthorized fees. The directive mandates institutions to implement internal controls, publicly educate clients via social media to avoid broker commissions, and establish electronic safeguards to prevent business relationships with such intermediaries. Furthermore, lenders must promptly report any discovered brokerage violations to the Authority’s Anti-Money Laundering and Combating the Financing of Terrorism Department and disclose the disciplinary actions taken against complicit staff.
[Logo of the Palestine Monetary Authority]
PALESTINE MONETARY AUTHORITY
Circular No. (299 / 2022) To all specialized lending institutions operating in Palestine Date: Tuesday, December 06, 2022
Subject: Prudence and Caution
The Palestine Monetary Authority urges specialized lending institutions to exercise prudence and caution regarding certain individuals soliciting new clients to obtain facilities and financing, in exchange for borrowers paying a portion of the loan to a broker as fees or commissions, in return for facilitating the borrower's application for the facility or financing. In order to safeguard lending institutions from risks and to prevent clients from falling victim to such unprofessional practices, we emphasize the necessity of the following:
- Taking necessary measures and decisions to combat the phenomenon of brokerage related to client solicitation for achieving financing goals, highlighting the dangers of dealing with them, and clarifying the administrative and legal penalties that may be imposed on violating employees.
- Raising client awareness via social media against resorting to brokers to obtain loans and facilities, warning them against paying any amounts or fees to them for facilitating the borrowing process, and emphasizing that applications for financial services and products must be submitted by visiting branches or through the institution's approved electronic channels and applications.
- Establishing electronic arrangements and controls to ensure no business relationships are created or maintained with loan and facility brokers, nor providing financial services to them.
- Notifying the Palestine Monetary Authority of the corrective and disciplinary measures 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
www.pma.ps Ramallah and Al-Bireh Governorate - Palestine P.O. Box 452 Tel: +970 2 2415251 | Tel: +970 2 2415310 | Fax: +970 8 2844487 | Fax: +970 8 2825713 Gaza - Palestine P.O. Box 4026