Regulatory Alerts2007-01-01
Circular No. 111: Disposal of Illicit Gains
The Palestine Monetary Authority issued Circular No. 111/2007 to mandate that all Islamic banks operating in Palestine must fully dispose of illicit gains balances through charitable distributions and public benefit projects within the current fiscal year. The directive explicitly prohibits banks from retaining, carrying forward, or offsetting these funds against operational costs, marketing, training, or any other expenses that would directly or indirectly benefit the institution. Full compliance with these disposal mechanisms is mandatory effective immediately upon the circular's issuance date of August 1, 2007.
Palestine Monetary Authority
Palestine Monetary Authority
Circular No. (111/2007)
To all Islamic banks operating in Palestine Date: Wednesday, August 01, 2007
Subject: Disposal of Illicit Gains
With reference to the fatwa issued by His Eminence the Grand Mufti of Jerusalem and Palestine dated 25/7/2007 regarding the handling of illicit gains accounts by Islamic banks, and to clarify the mechanisms for disposing of illicit gains, all Islamic banks operating in Palestine must handle illicit gains accounts as follows:
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Illicit gains balances must be disposed of in general community aspects that benefit society as a whole, such as distributing them to poor Muslims or for the general interests of Muslims.
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Banks are prohibited from agreeing to pay any amounts from the illicit gains balance to the bank itself, whether this agreement relates to training, media and marketing campaigns, credit fees at financial and cultural conferences and seminars, consulting fees, gifts, excessive expenses, or any other similar expenses that benefit the bank, as the bank is obligated to cover such expenses as inherent commitments.
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It is necessary to dispose of the illicit gains balance through charitable and benevolent avenues and public benefit uses within the year, as well as not carrying forward or rolling over the illicit gains balance to subsequent years.
This circular takes effect from its date, and all Islamic banks operating in Palestine must fully comply with it.
Bank Supervision Department Palestine Monetary Authority
Ramallah - Al Bireh P.O.Box 452 - Tel.: 02-2409920 - Fax: 02-2409922 Gaza - P.O. Box 4026 - Tel.: 08-2825713 - Fax: 08-2844487 E-mail: info@pma.ps www.pma.ps Ramallah - Al Bireh - P.O. Box: 452 - Tel.: 02-2409920 - Fax: 02-2409922 Gaza - P.O. Box: 4026 - Tel.: 08-2825713 - Fax: 08-2844487