Palestine Monetary Authority

PALESTINE MONETARY AUTHORITY

Instructions No. (30) of 2020

Regarding Key Officials at Specialized Lending Institutions

Based on the provisions of Decision No. (132) of 2011 on the Licensing and Supervision of Specialized Lending Institutions, particularly Articles (3 and 22) thereof, and in the public interest, and in accordance with the powers delegated to us, we have issued the following Instructions:

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Article (1)

Scope of Application

The provisions of these Instructions shall apply to all specialized lending institutions licensed by the Palestine Monetary Authority.

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Article (2)

Objective

These Instructions aim to regulate and govern the relationship between specialized lending institutions and key officials in accordance with prevailing laws and regulations.

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Article (3)

Definitions

The following words and phrases used in these Instructions shall have the meanings specified below, unless the context indicates otherwise:

Institution:	A specialized lending institution licensed by the Palestine Monetary Authority.
Core Departments:	Any department or function performing financial transactions, operations, facilities, risk management, anti-money laundering and counter-terrorist financing, internal audit, Shariah supervision, or customer rights protection.
Key Official:	The General Manager, their deputies, assistants, and the head of each core department.

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Article (4)

General Provisions

1. The Institution shall comply with the following:
   • Maintain an employee affairs system approved by its Board of Directors that aligns with prevailing laws and legislation, covering appointments and promotions based on competence and professionalism, and defining authorities, procedures for appointment, promotion, transfer, assignment, disciplinary actions, penalties, termination of service, and resignation.
   • Maintain job descriptions for all positions, including minimum qualification requirements such as academic credentials, practical experience, and the duties and responsibilities of the position holder.
   • Establish all core positions and staff them with personnel capable of performing the assigned duties.
   • If the Institution wishes to create a new position related to a key official in its organizational structure, it must provide the Palestine Monetary Authority with the organizational structure and the new job description, approved by the Institution's Board of Directors.
   • Obtain prior written approval from the Palestine Monetary Authority before appointing any key official.
   • Ensure that the key official is a permanent resident of Palestine.
   • If the Palestine Monetary Authority determines that its approval for the appointment of a key official was based on incorrect information provided by the Institution, it may rescind its decision and hold the Institution fully responsible.
   • The Institution may, after obtaining prior written approval from the Palestine Monetary Authority, combine the roles of anti-money laundering and counter-terrorist financing, risk management, and customer rights protection under a single candidate, provided that this individual performs the duties of these roles separately.
   • The decision to appoint key officials must be issued by the Institution's Board of Directors or its authorized committees, if required.

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Article (5)

Appointment of Key Officials

The Institution shall comply with the following when seeking to appoint any key official:

1. Submit a written application to the Palestine Monetary Authority to obtain prior written approval, specifying the job title of the position to be filled, subject to the following conditions and requirements:

   • A vacant position must exist in the Institution's approved organizational structure.

2. Verify that the candidate meets the following conditions:

   • Possesses sufficient academic qualifications and practical experience for the position.
   • Is capable of permanent residence in Palestine.
   • Has not caused the collapse or incurred losses for a bank, specialized lending institution, or any other institution where they served as a key official or board member; has not been declared bankrupt or unable to pay debts; is not listed on local or international sanctions/freeze lists related to money laundering or terrorist financing crimes; and has not been convicted by a final court judgment of theft, fraud, embezzlement, forgery, defamation, bribery, mismanagement of credit, or any crime involving moral turpitude, dishonesty, or public decency.

3. Attach the following documents to the application, duly certified:

   • a. The Institution's organizational structure indicating the vacancy and the job description for the position.
   • b. A copy of the candidate's national ID and passport(s).
   • c. A clear written declaration from the candidate regarding their nationality/nationalities.
   • d. The candidate's curriculum vitae, including a summary of their personal and professional background, residential address, and a chronological list of previous positions held, specifying the institutions and employment periods for each role.
   • e. Copies of academic degrees issued by competent authorities, and copies of relevant professional experience certificates related to the position.
   • f. A valid certificate of non-conviction.
   • g. A copy of the Board of Directors' resolution or relevant authorized committee decision regarding the intent to appoint the key official (candidate), if required, in accordance with the approved employee affairs system.

4. Verify that the candidate was not terminated from their previous position for violating prevailing legislation; if confirmed, the nature of the violation must be disclosed in the application submitted to the Palestine Monetary Authority.

5. Employees over the age of sixty shall be engaged under a special employment contract annually, subject to prior written approval from the Palestine Monetary Authority, unless the Institution's approved employee affairs system stipulates otherwise.

6. The Institution is prohibited from leaving any key official position vacant for more than two weeks at the latest; the Institution must submit an application for prior written approval to appoint a new candidate or assign another employee to fill the position.

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Article (6)

Customer Rights Protection Officer

The Institution shall comply with the following:

1. Include the Customer Rights Protection Officer position in the Institution's organizational structure, reporting directly to the Social Performance Monitoring Committee, with the role responsible for monitoring compliance with customer rights protection and the Institution's social vision and mission.

2. The Customer Rights Protection Officer must prepare a biannual periodic report submitted to the Social Performance Monitoring Committee, which shall review it and follow up on the recommendations contained therein.

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Article (7)

Anti-Money Laundering and Counter-Terrorist Financing Officer

The Institution shall comply with the following:

1. Take necessary measures to comply with the Anti-Money Laundering and Counter-Terrorist Financing Law through a dedicated AML/CFT function, which must be included in the Institution's organizational structure. The holder of this role shall be responsible for implementing the Institution's AML/CFT procedures, liaising with the Financial Intelligence Unit, and reporting any suspicious transactions, known incidents, or activities that may indicate money laundering, terrorist financing, or any predicate offenses under the Law, and shall be designated as the Anti-Money Laundering and Counter-Terrorist Financing Officer.

2. Subject the work and activities of the AML/CFT function to internal audit within the Institution.

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Article (8)

Shariah Supervisor

Institutions providing Islamic financing services shall comply with the following:

1. Appoint a resident Shariah Supervisor after obtaining prior written approval from the Palestine Monetary Authority.

2. The resident Shariah Supervisor shall perform the duties and responsibilities outlined in Instructions No. (4) of 2017 regarding the Code of Best Practices for Governance of Specialized Lending Institutions and any subsequent amendments thereto.

3. In addition to the duties and responsibilities in Instructions No. (4) of 2017, the Institution's Shariah Supervisor must adhere to the Code of Ethics issued by the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) and verify that the Institution's management complies with the decisions of the Supreme Shariah Supervisory Board.

4. In addition to the provisions of Article (4) paragraph (2) of these Instructions, the Institution must attach the following documents when applying to appoint a resident Shariah Supervisor:

   • a. The candidate must hold at least a bachelor's degree in a relevant field.
   • b. Possess appropriate knowledge, familiarity, and training in the field of work.

5. The Institution is prohibited from assigning the Shariah Supervisor to any work that conflicts with their supervisory duties. If the Institution wishes to combine the Shariah Supervisor role with any other functions, it must submit a prior approval request to the Palestine Monetary Authority.

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Article (9)

Transfer, Assignment, and Promotion

1. The Institution may transfer any key official to another key position within the Institution after verifying that their experience and qualifications align with the requirements of the target position, subject to submitting a request for prior written approval from the Palestine Monetary Authority.

2. If a key official position becomes vacant, the Institution may assign another employee to fill it, provided they possess sufficient academic and practical qualifications. The assignment shall not exceed six months and may be renewed only once, subject to notifying the Palestine Monetary Authority within one week from the date of assignment.

3. If the Institution wishes to promote any employee to a key official position, promote an existing key official to a role with higher duties and responsibilities, or change an employee's job title to a key official position, the Institution must submit a written application for prior written approval from the Palestine Monetary Authority.

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Article (10)

Resignation

If any key official submits a resignation, the Institution must notify the Palestine Monetary Authority in writing of the resigning key official's name within one week from the date of resignation. The notification must include the following information:

1. Date of appointment and position held at the time of appointment.
2. Reasons for resignation.
3. Last position held.
4. Date of resignation submission.

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Article (11)

Disciplinary Actions

1. The Institution must promptly notify the Palestine Monetary Authority via email and in writing within one week of any disciplinary action taken against its employees, including termination of service. The notification must include:

   • a. The nature of the employee's violation that led to the disciplinary action.
   • b. The employee's previous and current job titles and their appointment date at the Institution.
   • c. A copy of the investigation report with the official or employee, including the investigation findings and decisions reached.
   • d. Disciplinary procedures stipulated in the Institution's approved employee affairs system, specifying those applied to the employee.

2. The Institution must provide the Palestine Monetary Authority with the requirements in paragraph (1) of this Article in the following cases:

   • a. Mismanagement of credit.
   • b. Breach of trust.
   • c. Sexual harassment.
   • d. Conviction by a final court judgment for theft, fraud, embezzlement, forgery, defamation, bribery, crimes involving moral turpitude or public decency, or any money laundering or terrorist financing crime.
   • e. Declaration of bankruptcy or inability to pay debts, rendering the employee or key official in default.
   • f. Committing a violation covered by the Institution's employee affairs system and code of conduct.
   • g. Dismissal and termination of service of the perpetrator.

3. The Institution is prohibited from concealing or covering up any violations or misconduct committed by any of its officials or employees.

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Article (12)

Termination of Service

The termination of service of key officials shall be decided by the Institution's Board of Directors or its authorized committees for positions requiring such, provided the decision is reasoned and the Palestine Monetary Authority is notified in writing of the reasons prior to the decision being made.

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Article (13)

Repeal

The following are hereby repealed:

1. Instructions No. (2012/02) regarding the Management of Specialized Lending Institutions.
2. Any provisions conflicting with the terms of these Instructions.

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Article (14)

Implementation and Enforcement

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

Issued in Ramallah on 27/08/2020

Financial Stability Group
Palestine Monetary Authority