Decree No. 41 of 2016 on the Licensing and Supervision of Money Changers

Issue No. (119) Palestinian Gazette 2016/3/29

Decree No. (41) of 2016 on the Licensing and Supervision of Money Changers

President of the State of Palestine, Chairman of the Executive Committee of the PLO, Based on the provisions of the amended Basic Law of 2003 and its amendments, And on the provisions of the Temporary Currency Control Law No. (95) of 1966, And on the provisions of Law No. (2) of 1997 concerning the Palestinian Monetary Authority and its amendments, particularly Articles (5) and (73), Based on the proposal of the Board of Directors of the Palestinian Monetary Authority dated 2014/11/30, And on the powers delegated to us, And in pursuit of the public interest,

We have issued the following System:

Chapter One Definitions and General Provisions

Article (1) Definitions The words and expressions used in this System shall have the meanings assigned to them below, unless the context indicates otherwise: Monetary Authority: The Palestinian Monetary Authority. Governor: The Governor of the Monetary Authority. Board: The Board of Directors of the Monetary Authority. Person: A natural or legal person. Money Changer: A natural or legal person licensed by the Monetary Authority to conduct money exchange activities under this System. Applicant: The person who has submitted an application to the Monetary Authority for a license to conduct money exchange activities. Money Exchange Activities: The activities specified in Article (9) of this System. Branch: A workplace that forms a legally subordinate part of the Money Changer, where all or some money exchange activities are conducted. Correspondent Company: A foreign money exchange company or bank operating outside Palestine with which the Money Changer transacts business.

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Article (2) Objectives and Scope of Application

1. This System aims to regulate money exchange activities and preserve the soundness, effectiveness, and stability of the financial and monetary system.
2. The provisions of this System shall apply to all Money Changers in accordance with the stipulations herein.

Chapter Two Licensing Provisions

Article (3) License

1. No person shall conduct money exchange activities without obtaining a license from the Monetary Authority.
2. Every person wishing to conduct money exchange activities must submit a license application to the Monetary Authority in accordance with the instructions issued for this purpose.
3. No new person wishing to conduct money exchange activities shall be granted a license by the Monetary Authority unless through a company registered under the prevailing Companies Law.
4. No new company may be registered with the Registrar of Companies for the purpose of conducting money exchange activities without prior approval from the Monetary Authority.
5. The Monetary Authority may classify Money Changers into categories according to risk size, in accordance with instructions issued for this purpose.
6. No person shall use the word "money exchange" or its synonyms, or any other expression similar to it in any language, on their documents, printed materials, or trade name without holding a license or prior approval from the Monetary Authority.
7. The Monetary Authority may request competent authorities to take necessary legal action against any person found conducting money exchange activities without prior licensing.
8. The Monetary Authority may request any person to provide its books, documents, and accounts if there is a suspicion that they are conducting money exchange activities without the required license.

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Article (4) Licensing Procedures

1. The Monetary Authority shall respond in writing to the applicant within (30) days from the date of receiving the application, regarding its completeness, with the response specifying the deficiencies to be provided for the Authority to consider the application.
2. Deficiencies must be completed within (60) days from the date of response; otherwise, the license application shall be deemed void.
3. The Monetary Authority shall issue a written decision within (30) days from the date of application completion, with reasoned decisions in case of rejection.
4. In case of approval, the Monetary Authority shall grant the applicant a period of (6) months to complete the procedures and requirements for final approval, which may be extended by the Monetary Authority for an additional (6) months. The approval shall automatically lapse upon expiration of the granted period if procedures and requirements are not completed.
5. The Money Changer must conduct its activities within the period specified in paragraph (4) of this Article. The Money Changer may submit a written statement of reasons for failing to commence operations.
6. The Monetary Authority may, upon accepting the Money Changer's written reasons, extend the period by (30) days non-renewable.
7. The license shall automatically be deemed void if the Money Changer, who has received final approval to conduct its activities, fails to commence operations within the period specified in this Article.

Article (5) License Renewal The Monetary Authority shall issue the necessary instructions for license renewal.

Article (6) Branching, Transfer, and Closure The Monetary Authority shall issue the necessary instructions for branching, transfer, and closure.

Article (7) Money Changers Register

1. The Monetary Authority shall maintain a central register of all Money Changers.
2. The Monetary Authority shall publish a list of Money Changers on its website.

Article (8) Fees, Cash Deposits, and Service Charges

1. The Monetary Authority shall collect the following fees from Money Changers: a. Application submission fee. b. One-time license fee upon granting the license. c. Annual license fee for the head office and branches. d. The Monetary Authority may collect a financial alternative for any services provided to the Money Changer, as determined by instructions issued for this purpose.
2. The license application fee shall be paid upon submitting a new license or branching application.
3. The annual license fee shall be paid at the beginning of the calendar year, no later than January 31 of each year.
4. The annual license fee for a new Money Changer or new branches granted during the year shall be calculated based on the proportion of months in the year, starting from the date of license issuance. Fractions of a month shall be considered as a full month for fee calculation purposes.
5. The Board may exempt the Money Changer from the annual license fee or part thereof if it ceases to conduct its activities in accordance with this System.
6. The Monetary Authority shall issue instructions specifying the fees mentioned in paragraph (1) of this Article.
7. The Monetary Authority may collect a cash deposit from the Money Changer in accordance with instructions issued for this purpose.

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Chapter Three Permitted and Prohibited Activities

Article (9) Permitted Activities

1. The Money Changer may conduct the activities mentioned in paragraph (2) of this Article, subject to conditions and requirements determined by the Monetary Authority through instructions issued for this purpose.
2. Subject to paragraph (1), the Money Changer may conduct the following activities: a. Buying and selling various currencies. b. Buying and selling unprocessed precious metals. c. Opening and using accounts in various currencies with correspondent companies. d. Issuing and accepting remittances within Palestine. e. Issuing and accepting remittances outside Palestine. f. Any other financial activity permitted by the Monetary Authority through instructions issued for this purpose.

Article (10) Prohibited Activities Subject to Article (9), the Money Changer is prohibited from conducting the following activities:

1. Opening accounts for its clients, accepting deposits or securities of all kinds, or precious metals.
2. Providing direct or indirect loans, facilities, or financing.
3. Speculating on currency and precious metal prices in a manner that may harm financial or monetary stability or the public interest.

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Chapter Four Money Changer Management

Article (11) Memorandum and Articles of Association Upon registration of a money exchange company, prior written approval from the Monetary Authority must be obtained for the draft Memorandum and Articles of Association. No amendments may be made to them without prior written approval from the Monetary Authority.

Article (12) Internal Policies and Systems

1. The Money Changer must establish internal policies, systems, and procedures ensuring smooth operations.
2. The Money Changer must periodically review internal policies, systems, and procedures.
3. The Monetary Authority may specify the requirements and conditions for employees of the Money Changer, in accordance with instructions issued for this purpose.

Article (13) Working Hours and Official Holidays The Monetary Authority determines working hours, official holidays, and religious holidays through circulars issued by it.

Article (14) Confidentiality Requirements

1. The Money Changer and all its employees must maintain the confidentiality of client information and documents received in the course of their duties. None may disclose such information or allow others to access it. This prohibition applies to anyone who accesses the data and information directly or indirectly by virtue of their profession, position, or employment, unless such access is pursuant to: a. The client's written consent. b. A ruling issued by a competent court.
2. The following cases are exempt from the confidentiality requirements in paragraph (1), with these parties obligated to maintain confidentiality regarding the information they obtain: a. Disclosure of information and documents requested by the Monetary Authority or its employees performing their duties. b. Disclosure to fulfill obligations specified for the external auditor under this System. c. Disclosure to fulfill obligations specified for legal advisors. d. Specified disclosure of information pursuant to the Anti-Money Laundering and Counter-Terrorist Financing Law and its issued instructions. e. Disclosure by the Money Changer of some or all client transaction information to provide judicial evidence in ongoing claims regarding these transactions. f. Chairmen of boards of money exchange companies seeking merger or acquisition, or those specially authorized for this purpose, may exchange necessary information regarding their companies to complete merger or acquisition studies, subject to prior written approval from the Monetary Authority. These persons are personally responsible for maintaining confidentiality of information accessed in this regard, under legal liability.
3. The Monetary Authority shall specify instructions governing the confidentiality of data related to Money Changers.

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Chapter Five Capital, Profits, and Reserves

Article (15) Capital, Profits, and Reserves

1. Each Money Changer must maintain capital commensurate with the nature and size of its operations, in accordance with Monetary Authority instructions.
2. Each Money Changer must maintain the minimum capital at all times, in accordance with Monetary Authority instructions.
3. The Money Changer is prohibited from increasing or reducing capital without prior written approval from the Monetary Authority.
4. The Monetary Authority shall issue necessary instructions to regulate the mechanism for handling profits and reserves.

Chapter Six Anti-Money Laundering and Counter-Terrorist Financing

Article (16) Anti-Money Laundering and Counter-Terrorist Financing

1. Subject to the provisions of the prevailing Anti-Money Laundering and Counter-Terrorist Financing Law, no Money Changer shall conceal fund transfers or other operations while knowing that these funds originate from unlawful activities, with the aim of concealing their source or assisting any person involved in these activities to avoid legal prosecution.
2. The "knowledge" referred to in the preceding paragraph is knowledge that can be inferred from actual and objective circumstances.
3. The Money Changer must notify the Financial Monitoring Unit and provide it with suspicious transaction reports and any available evidence proving that these funds or assets originate from unlawful activities, plus any additional information requested regarding these activities, in accordance with the Anti-Money Laundering and Counter-Terrorist Financing Law.
4. The Monetary Authority shall issue instructions related to anti-money laundering and counter-terrorist financing concerning licensing and supervision of the money exchange profession.

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Chapter Seven Accounts and Reports

Article (17) Financial Year The financial year of the Money Changer begins on January 1 and ends on December 31 of each calendar year.

Article (18) Statements and Accounting System

1. The Money Changer must organize its financial and accounting records in accordance with instructions issued by the Monetary Authority for this purpose.
2. The Money Changer must operate according to financial and accounting systems in accordance with instructions issued by the Monetary Authority for this purpose.

Article (19) Internal and External Auditing

1. The Monetary Authority specifies internal auditing requirements for Money Changers through instructions issued for this purpose.
2. The Money Changer must appoint a statutory auditor to audit and review its annual accounts, in accordance with instructions issued by the Monetary Authority for this purpose.

Article (20) Reports Submitted to the Monetary Authority

1. The Money Changer must provide the Monetary Authority with data, information, and reports related to its activities periodically, in accordance with instructions issued by the Monetary Authority for this purpose.
2. The Money Changer must send copies of audited financial statements to the Monetary Authority, in accordance with instructions issued by the Monetary Authority.
3. The Monetary Authority may request the Money Changer to answer any inquiries within a period it determines.

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Chapter Eight Other Controls and Requirements

Article (21) Other Controls and Requirements The Monetary Authority shall specify through issued instructions the following:

1. Regulation of liquidation processes in accordance with the Companies Law and other prevailing relevant laws.
2. Regulation of merger, acquisition, and ownership processes for money exchange companies.
3. Liquidity, its caps, ratios, and calculation mechanism.
4. Commissions and fees.
5. Public awareness, fair treatment of customers, and mechanisms for handling citizen complaints.
6. Mechanism for exchanging correspondence with the Monetary Authority.
7. Security safety requirements.
8. Any risks that the Money Changer may face.

Chapter Nine Inspection and Supervision

Article (22) Inspection

1. The Monetary Authority may appoint one or more inspectors to inspect the Money Changer or any of its branches at any time, examining books, records, automated systems, and financial data. Inspection may include: a. Verifying the soundness of the financial position, capital adequacy, asset quality, effectiveness and risks of operations, management assessment, service quality, and liquidity availability to meet operational requirements. b. Evaluating internal control performance and compliance with this System and its issued instructions. c. Verifying the soundness and efficiency of used automated systems, availability of dual control and segregation of duties, efficiency and accuracy of outputs, meeting work needs, and compliance with Monetary Authority requirements. d. Verifying the availability of policies, standards, and work procedures ensuring money exchange activities are conducted within their proper framework, compliance with them, and updating them to keep pace with developments in the work environment.
2. The Money Changer must provide Monetary Authority inspectors with all required books, records, accounts, documents, and any necessary requirements to complete the inspection process.
3. Monetary Authority employees assigned to supervision and inspection shall have the status of judicial police officers within their jurisdictions.

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Chapter Ten Violations, Corrective Actions, and Fines

Article (23) Violations and Corrective Actions

1. If the Monetary Authority determines that a Money Changer has violated this System or its issued instructions, it may take one or more of the following actions: a. Issuing a notice to rectify and correct the violation. b. Issuing an immediate decision for the Money Changer to proceed with the violation and take urgent corrective action. c. Requiring the Money Changer to submit a corrective timeline program for intended actions or a detailed description of actions taken to rectify violations and correct its status. d. Refusing branching applications. e. Imposing financial fines in accordance with Article (24) of this System. f. Temporarily closing the Money Changer. g. Revoking the Money Changer's license and striking it from the Money Changers Register, in accordance with Article (25) of this System.
2. The Monetary Authority shall issue instructions specifying corrective actions for Money Changers.
3. If any of the actions stipulated in this Article are taken, it shall not waive civil and criminal liability according to any other legislation.

Article (24) Imposition of Fines

1. Any person violating this System and its issued instructions shall be fined a monetary penalty not less than (100) one hundred US dollars and not exceeding (10,000) ten thousand US dollars.
2. The fines mentioned in paragraph (1) shall be issued by a decision of the Governor.

Article (25) License Revocation The Monetary Authority may revoke the Money Changer's license in any of the following cases:

1. If the Money Changer obtained the license based on incorrect information.
2. If the Money Changer failed to conduct its activities within the period specified in Article (4) of this System.
3. If the Money Changer made changes affecting the nature of its activity contrary to the conditions of the granted license.
4. If the Money Changer declared bankruptcy or a liquidation order was issued against it.
5. If the money exchange company merged or transferred its ownership or part of it to another company without prior approval from the Monetary Authority.
6. If the Money Changer ceased conducting its activities for more than (3) months without justified reason.
7. If the Money Changer repeatedly failed to comply with this System and its issued instructions.
8. If the Money Changer requests it.
9. If the individual Money Changer dies.
10. If the individual Money Changer is convicted by a competent court of an offense involving breach of honor and trust.

Article (26) Repeal of Conflicts

1. Instructions, decisions, and circulars issued by the Monetary Authority shall remain in force to the extent they do not conflict with this System until repealed and replaced by instructions and circulars issued under this System.
2. All that conflicts with the provisions of this System is repealed.

Article (27) Instructions The Monetary Authority shall issue the necessary instructions and circulars to implement the provisions of this System.

Article (28) Promulgation and Entry into Force All competent authorities shall implement the provisions of this Decree according to their respective jurisdictions, and it shall be effective from the date of its publication in the Official Gazette.

Issued in Ramallah on: 25/02/2016 Gregorian Corresponding to: 16/ Jumada al-Awwal / 1437 Hijri

Mahmoud Abbas President of the State of Palestine Chairman of the Executive Committee of the PLO

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