Palestine Monetary Authority

PALESTINE MONETARY AUTHORITY

Instructions No. (15) of 2019

Concerning the Anti-Money Laundering and Counter-Terrorist Financing Function

Pursuant to the provisions of Legislative Decree No. (9) of 2010 concerning Banks, particularly Article (43) thereof, and the provisions of the effective Anti-Money Laundering and Counter-Terrorist Financing Law and the instructions issued pursuant to it, and in pursuit of the public interest, we have issued the following instructions:

Article (1)

Scope of Application

The provisions of these instructions shall apply to all banks licensed by the Palestine Monetary Authority to conduct banking business in Palestine and their external branches.

Article (2)

Responsibility of the Bank's Board of Directors

The Bank's Board of Directors shall perform the following:

1. Establish an Anti-Money Laundering and Counter-Terrorist Financing function to monitor compliance with the provisions of the Legislative Decree concerning Anti-Money Laundering and Counter-Terrorist Financing, with this function assigned to an independent employee designated as the Manager/Head of Anti-Money Laundering and Counter-Terrorist Financing.
2. Supervise the Anti-Money Laundering and Counter-Terrorist Financing function within the Bank and approve the charter or mechanism of another official document under which this function is established.
3. Adopt a clear organizational structure for the Anti-Money Laundering and Counter-Terrorist Financing function, ensuring the structure is commensurate with the Bank's size, scale, operational complexity, and customer base.
4. Adopt job descriptions for Anti-Money Laundering and Counter-Terrorist Financing functions, including tasks, responsibilities, and qualifications and specifications for incumbents.
5. Adopt a risk-based (RBA) procedure manual for the Anti-Money Laundering and Counter-Terrorist Financing function, based on the recommendations of the Financial Action Task Force (FATF) and best international practices.

Article (3)

Responsibilities and Duties of the Bank

1. Provide adequate controls, systems, and programs to identify and prevent any potential misuse of financial and banking services, products, and technologies, and to report potential violations, ensuring the following are available:
   أ. Electronic systems and programs specifically for Anti-Money Laundering and Counter-Terrorist Financing, capable of classifying customer risks, monitoring and tracking financial transactions and movements according to specific scenarios and indicators, and detecting unusual transactions, movements, and suspicious activities. ب. Electronic systems and programs to periodically screen the customer base against international and local sanctions and freezing lists, and to screen external financial transaction counterparties prior to execution.
2. Ensure that the Bank's subsidiaries comply with Anti-Money Laundering and Counter-Terrorist Financing requirements and standards.
3. Monitor and audit employees' bank accounts to ensure they are not misused for the benefit of third parties and/or contrary to their nature and purpose or for criminal activities, monitor employees' unusual financial activity, examine whether such transactions are commensurate with the nature of the accounts and monthly income, and verify the integrity of transactions and ensure due diligence procedures are applied.

Article (4)

Independence of the Anti-Money Laundering and Counter-Terrorist Financing Function

The Bank must ensure the independence of the Anti-Money Laundering and Counter-Terrorist Financing function from the Bank's executive activities and operations, ensuring the function head has the following:

1. A position on the Bank's organizational chart clarifying its reporting line and independence, reporting directly to the Board of Directors, the Risk Management Committee, or the Audit Committee derived therefrom.
2. The Bank may form a single department encompassing Anti-Money Laundering and Counter-Terrorist Financing and compliance control functions, provided prior approval is obtained from the Palestine Monetary Authority, without conflicting with other regulatory requirements and without affecting the performance of tasks specified in the Law and instructions.
3. The Bank may assign the Anti-Money Laundering and Counter-Terrorist Financing function to the Compliance Department or the AML/CFT Department in the General Administration, provided the following conditions are met:
   أ. Obtaining prior approval from the Palestine Monetary Authority.
   ب. The aforementioned departments in the General Administration are independent and report directly to the Bank's Board of Directors or the derived committee.
   ت. Reports regarding the Bank's branches operating in Palestine are submitted to the Board of Directors or the derived committee.
   ث. The responsibility for appointing and terminating the Anti-Money Laundering and Counter-Terrorist Financing Officer is as stipulated in these instructions (Article 6).

Article (5)

Tasks and Responsibilities of the Anti-Money Laundering and Counter-Terrorist Financing Officer

The Bank's Anti-Money Laundering and Counter-Terrorist Financing Officer shall perform the following tasks and responsibilities:

1. Ensure the Bank meets and complies with the Anti-Money Laundering and Counter-Terrorist Financing requirements and duties stipulated in the effective Anti-Money Laundering and Counter-Terrorist Financing Law, the Palestine Monetary Authority instructions, the National Anti-Money Laundering and Counter-Terrorist Financing Committee, and the Bank's approved policies and procedures, including:
   أ. Sampling opened accounts and executed financial transactions and conducting compliance checks on them.
   ب. Reporting on the Bank's Anti-Money Laundering and Counter-Terrorist Financing environment and effectiveness, instances of failure to apply AML/CFT procedures, and instances of Bank employees' non-compliance with customer identification, verification, and enhanced due diligence procedures. ت. Necessary recommendations for remediation and correction. و/أو the committee implementing decisions of the UN Security Council established under effective legislation in the State of Palestine. ث. Retaining internal documents and reports submitted to the Palestine Monetary Authority and the Financial Intelligence Unit. ج. Applying the Risk-Based Approach (RBA) and classifying the Bank's customers according to their exposure to AML/CFT risks (high, medium, low), considering risk assessments targeting the institution, customers, products, distribution channels, and geographic dimension. ح. Periodically reviewing the classification of the Bank's customers' exposure to AML/CFT risks in light of unusual transactions and available information and data. خ. Periodically screening the Bank's customer base against international and local sanctions and freezing lists commensurate with the size of the customer base and financial transactions, and documenting the results. د. Participating in and/or supervising the preparation of the Bank's self-assessment of AML/CFT risks, including identifying those risks according to the main assessment axes (customers, products and services, distribution channels, geographic dimension). ذ. Participating in assessing AML/CFT risks in new financial and banking products, services, and technologies prior to launch, and when developing and modifying previous products, services, and technologies, and participating in establishing and strengthening necessary controls and measures to mitigate and manage those risks, documenting the same.
2. Submitting recommendations regarding financial resources and ensuring AML/CFT systems and programs, and their need for development and updating.

Article (6)

Appointment and Termination of the Anti-Money Laundering and Counter-Terrorist Financing Officer

1. The Anti-Money Laundering and Counter-Terrorist Financing Officer is appointed by the Board of Directors or the derived committee, with prior approval from the Palestine Monetary Authority required for the appointment.
2. The Bank shall submit the candidate's CV for the position, accompanied by a copy of the candidate's passport and personal ID, and necessary documents and certificates according to the Palestine Monetary Authority instructions regarding appointment, transfer, disciplinary procedures, and resignation, provided the candidate possesses the following minimum academic and practical qualifications:
   أ. Holds a bachelor's degree in accounting/financial and banking sciences/business administration/economics or any related field.
   ب. Has practical experience of no less than 5 years in the banking field, including at least 3 years in compliance control or Anti-Money Laundering and Counter-Terrorist Financing.
   ت. The candidate meets the job requirements according to the Bank's approved job description.
   ث. The following (courses provided on AML/CFT risk monitoring methods, courses on Anti-Money Laundering methods, courses on financial crimes and ways to combat them).
   ج. Familiarity with laws, legislation, instructions, best practices, and standards in the field of Anti-Money Laundering and Counter-Terrorist Financing, and familiarity with the requirements of the Basel Committee recommendations, FATF recommendations, and the Financial Action Task Force assessment methodology.

Article (7)

Application of the Anti-Money Laundering and Counter-Terrorist Financing Function to Internal Audit According to the Requirements of Article (7) of These Instructions

4. Independence from any executive activity in the Bank and avoidance of any responsibilities that may lead to a conflict of interest.
5. Easy access to any Bank employee and the ability to review files, documents, records, and internal investigation committees, and providing necessary tools to enable him to perform his duties seriously and impartially, including providing systems, programs, and authorities that assist in executing his tasks.
6. Complete freedom to execute his responsibilities through his own initiatives in all departments and sections of the Bank.
7. Complete freedom to write reports on any violations of laws, regulations, instructions, and breaches within the institution without fear of retaliation or harm from management or any employee related to the procedure, as well as when reporting suspicious cases to the monitoring unit.
8. Sufficient resources to enable him to perform his responsibilities independently, efficiently, and effectively.
9. Independence from his work compared to other supervisory functions, noting that this does not negate the necessity of coordination and integration among supervisory departments to avert risks.
10. The Anti-Money Laundering and Counter-Terrorist Financing function is subject to internal audit according to the requirements of Article (7) of these instructions.

Article (8)

Responding to Requests and Inquiries Related to Financial Transactions and Money Laundering and Counter-Terrorist Financing Operations

3. Responding to requests and inquiries related to financial transactions and money laundering and counter-terrorist financing operations from relevant authorities, provided they do not conflict with effective laws, and providing those authorities with necessary data, records, and documents promptly without delay or procrastination.
4. Monitoring and supervising ongoing financial transactions using specialized automated programs and systems for Anti-Money Laundering and Counter-Terrorist Financing, monitoring and reviewing suspicious financial movements and unusual transactions, and retaining records, studies, and information regarding all data pertaining to all suspicious and unusual transactions.
5. Receiving and studying reports submitted by any Bank employee in case the employee suspects that the intended transaction is suspected of being related to money laundering, terrorist financing, or any predicate crimes, and documenting the results.
6. Immediately notifying the Financial Intelligence Unit about suspected transactions involving money laundering, terrorist financing, or any predicate crimes, whether committed or not, ensuring that suspicious transaction reports are submitted according to approved reporting mechanisms.
7. Notifying the Anti-Money Laundering and Counter-Terrorist Financing Department at the Palestine Monetary Authority of suspicious activities and fraud cases affecting the Bank's security, integrity, and reputation.
8. Contributing to the development and coordination of specialized training programs for Anti-Money Laundering and Counter-Terrorist Financing, training Bank employees, and informing them of requirements and updates related to Anti-Money Laundering and Counter-Terrorist Financing, thereby enhancing their capacity to detect money laundering and terrorist financing operations.
9. Maintaining continuous communication with Bank departments and administrations to address deficiencies and weaknesses resulting from the National Risk Assessment of Money Laundering and Terrorist Financing, strengthening Anti-Money Laundering and Counter-Terrorist Financing, and ensuring the provision of NRA requirements.
10. Providing statistics related to the following:
    أ. Number of cases of receiving and responding to information requests.
    ب. Number of suspected cases referred to the Unit according to the type of suspected crimes.
    ت. Number of reported cases that were archived due to lack of suspicion indicators.
    ث. Frequency of screening customer names against international and local sanctions and freezing lists.

Article (9)

Number of cases related to Bank customer names matching persons and entities listed on international and local sanctions and freezing lists, and number of cases where customer names were verified as not matching persons and entities.

Training courses and programs provided to Bank employees on updates and requirements related to Anti-Money Laundering and Counter-Terrorist Financing.

Number of cases of seized currencies, checks, and documents suspected of forgery/falsification.

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