Regulatory Alerts2025-01-01
Circular No. 27 (2025) Results of the National Risk Assessment for Money Laundering and Terrorist Financing
The regulatory authority of the State of Palestine issues Circular No. 27 (2025) presenting the results of the National Risk Assessment for Money Laundering and Terrorist Financing, identifying "Medium to High" ML risks and "Low to Medium" TF risks across national and sectoral levels. The assessment highlights increased electronic fraud cases since 2017–2023 and confirms the state's strong capacity to mitigate these risks through robust national-level frameworks. It further details sector-specific weaknesses and mitigation capacities, providing a comprehensive baseline for regulatory oversight.
Results of the National Risk Assessment for Money Laundering and Terrorist Financing
- First, the key results of the national and baseline risk assessment for Money Laundering (ML) and Terrorist Financing (TF) crimes in the State of Palestine:
Chapter 1: Summary of ML Risk Assessment Results at the National Level. The ML risks in the State of Palestine are assessed as "Medium to High". Accordingly, the following factors were evaluated regarding these risks:
| Risk Category | Details | Risk Level | Assessment |
|---|---|---|---|
| ML Risks (at least): Money laundering, fraud, corruption, bribery, tax evasion, poor banking supervision, poor credit assessment, and financial sanctions. | High | ||
| Financial Institutions (banks, non-banks) | Medium to High | ||
| Securities & Financial Intermediation | Medium to High | ||
| Lending/Deposits | Low to Medium | ||
| Electronic Payments (including clearing & settlement, and payment instruments) | Medium to High | ||
| Insurance | Low to Medium | ||
| Real Estate & Property Management | Low to Medium | ||
| Financial Services (trusts, foundations, legal/accounting professionals) | Low to Medium |
It is also assessed that the national ML risk assessment has two main factors: The first relates to the weakness of the national level (national level) ML risk assessment, and the second relates to the capacity to mitigate ML risks at the national level (national level), based on the state's mitigation capacity. Recently, in 2024, and consequently, this was reflected in the National Risk Assessment which noted an important observation: the number of electronic fraud cases has increased, especially since 2017-2023.
Chapter 2: Summary of ML Risk Assessment Results at the Sectoral Level. The assessment is based on evaluating ML risks for each sector according to risk levels, weaknesses, and relevant factors:
Chapter 3: Summary of ML Risk Assessment Results for the Electronic Payment Sector. The assessment evaluates ML risks in the electronic payment sector (national level to medium), based on ML risk ratings for this sector, and national-level ML risk weaknesses in the sector. The assessment shows that general and specific risks in electronic payment sectors, according to:
| Risk Category | General Weaknesses | Specific Weaknesses |
|---|---|---|
| Electronic Payment Sector (National Level to Medium) | Low to Medium | Low to Medium |
| Securities & Financial Intermediation (National Level to Medium) | Low to Medium | Low to Medium |
| Lending/Deposits (National Level to Medium) | Low to Medium | Low to Medium |
| Electronic Payments (National Level to Medium) | Low to Medium | Low to Medium |
| Securities/Securities Intermediation (National Level to Medium) | Low to Medium | Low to Medium |
| Real Estate/Property Management (National Level to Medium) | Low to Medium | Low to Medium |
| Financial Services/Trusts & Foundations (National Level to Medium) | Low to Medium | Low to Medium |
Chapter 4: Summary of TF Risk Assessment Results at the National Level. The assessment evaluates TF risks at the national level (low to medium), with TF risk ratings in Palestine assessed as "Low to Medium". Accordingly, the following TF risks are evaluated:
| Risk Category | National Level Assessment |
|---|---|
| Financial Institutions (Banks, Non-banks) | Low to Medium |
| Securities & Financial Intermediation | Low to Medium |
| Insurance (Life/Non-life) | Low to Medium |
The assessment shows weaknesses in TF mitigation at the national level (national level), resulting from strong capacity to mitigate TF risks at the national level (national level). Accordingly, the weakness of the national sectoral level is assessed as "Low to Medium".
Chapter 5: Summary of TF Risk Assessment Results at the Sectoral Level. The assessment results for TF risks across sectors range from "Low" to "Medium", according to:
| Sectoral Level TF Risks | Risk Level | General Weaknesses | Specific Weaknesses |
|---|---|---|---|
| Financial Institutions (Banks, Non-banks) | Low to Medium | Low to Medium | Low to Medium |
| Securities & Financial Intermediation | Low to Medium | Low to Medium | Low to Medium |
| Lending/Deposits | Low to Medium | Low to Medium | Low to Medium |
| Electronic Payments | Low to Medium | Low to Medium | Low to Medium |
| Securities/Securities Intermediation | Low to Medium | Low to Medium | Low to Medium |
| Real Estate/Property Management | Low to Medium | Low to Medium | Low to Medium |
| Financial Services/Trusts & Foundations | Low to Medium | Low to Medium | Low to Medium |
Chapter 6: Summary of TF Risk Assessment Results for the Electronic Payment Sector. The following clarifies the criteria for evaluating TF risks in the electronic payment sector:
| Risk Category | National Level Assessment |
|---|---|
| Financial Institutions (Banks, Non-banks) | Low to Medium |
| Securities & Financial Intermediation (National Level to Medium) | Low to Medium |
| Real Estate/Property Management (Sectoral) | Not Applicable |
| Securities & Financial Intermediation (Sectoral) | Not Applicable |
| Real Estate/Property Management (Sectoral) | Not Applicable |
| Financial Services/Trusts & Foundations (Sectoral) | Not Applicable |
| TF Risk Rating for National Level | Low to Medium |
| TF Risk Rating for Sectoral Level | Low to Medium |
| TF Risk Rating for Cross-border/International | Low to Medium |
| TF Risk Rating for Domestic/Local | Not Applicable |
The assessment shows weaknesses in TF mitigation at the national level (national level), based on:
| Electronic Payment Sector | General/Specific Factors |
|---|---|
| Financial Institutions (Banks, Non-banks) | Low to Medium |
| Financial/Regulatory Authorities (Issuing) | Low to Medium |
| Financial/Regulatory Authorities (Receiving) | Low to Medium |
| Sectoral Financial/Regulatory Authorities (Issuing) | Low to Medium |
| Sectoral Financial/Regulatory Authorities (Receiving) | Low to Medium |
| Institutional Risk Profile | Low to Medium |
| Customer/Client Due Diligence (CDD/KYC) | Low to Medium |
| Money Laundering/Terrorist Financing Suitability/Effectiveness | Low to Medium |