Instructions No. 7 of 2022 Concerning Cross-Border Financial Operations

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Palestine Monetary Authority PALESTINE MONETARY AUTHORITY

Instructions No. (7) of 2022 Concerning Cross-Border Financial Operations

Pursuant to the provisions of Decision No. (41) of 2016 regarding the licensing and regulation of the money exchange profession, particularly Articles (9) and (27) thereof, and after reviewing the provisions of Legislative Decree No. (20) of 2015 concerning the prevention of money laundering and terrorist financing and its amendments, and in accordance with the powers delegated to us, and in pursuit of the public interest, we have issued the following Instructions:

Article (1) Definitions

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

• External Financial Institution: An institution operating outside Palestine licensed by the regulatory authority in the home country to provide financial services.
• Cross-Border Financial Operation: The exchange of currency through cash shipment or financial remittance with an external financial institution.
• Financial Remittance: The electronic transfer of funds across borders between a money exchange company and an external financial institution to execute currency buy and sell transactions on behalf of the exchange company.

Article (2) Objective and Scope of Application

1. The provisions of these Instructions aim to regulate cross-border financial operations related to the exchange of foreign currency with external financial institutions to ensure the handling of surpluses and deficits in currency demand in the absence of a national currency.
2. The provisions of these Instructions apply to all money exchange companies licensed by the Palestine Monetary Authority.

Article (3) Conditions for Dealing with External Financial Institutions

A money exchange company must, prior to commencing dealings with an external financial institution, comply with the following conditions:

1. The availability of policies and operational procedures for dealing with external financial institutions, along with a mechanism for executing, settling, and monitoring financial operations.
2. The availability of specific procedures and controls to mitigate risks associated with dealing with external financial institutions, including operational risks and risks related to money laundering and terrorist financing crimes.
3. Taking all necessary measures to ensure that the intended external financial institution: a. Has a physical presence. b. Is licensed by the regulatory authority in the home country. c. Has policies and operational procedures that comply with the provisions of laws, instructions, and international standards governing financial transactions, including money laundering and terrorist financing prevention.

Article (4) Means of Executing Cross-Border Financial Operations

A money exchange company may execute a cross-border financial operation through any of the following means:

1. Exchanging cash currency for another cash currency circulating in Palestine, according to Annex No. (1).
2. Exchanging cash currency for an incoming financial remittance in the same currency or another currency circulating in Palestine, according to Annex No. (2).
3. Issuing a financial remittance against cash currency circulating in Palestine, according to Annex No. (3).
4. Issuing a financial remittance against an incoming financial remittance in another currency, according to Annex No. (4).

Article (5) Conditions for Executing Cross-Border Financial Operations

A money exchange company must, when executing a cross-border financial operation, comply with the following:

1. Obtaining the prior written approval of the Palestine Monetary Authority before executing any cross-border financial operation, in accordance with the provisions of Article (4) of these Instructions.
2. Declaring the transfer of funds through border crossings to the competent authorities and providing the Palestine Monetary Authority with all documents and records proving the execution of the operation.
3. That the financial remittance is issued or received through bank accounts for both the money exchange company and the external financial institution at banks, under their trade names approved by the regulatory authorities in the home country.
4. That the remittance is executed through approved international transfer systems and that the remittance amount matches the amount of the executed shipment operation.
5. Recording all cross-border financial operations in the accounting system approved by the Palestine Monetary Authority, including all related information, and retaining supporting documents and invoices.

Article (6) Conditions for Cash Currency Shipment

A money exchange company wishing to execute a cash currency shipment to or from Palestine must comply with the following:

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[Palestine Monetary Authority Contact Information]

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1. That the shipment operation is conducted using secure means, observing confidentiality, precaution, and caution controls.
2. Insuring the funds being transferred.
3. That the crew assigned to the shipment possesses sufficient conditions and qualifications to carry out shipment operations.
4. In case the shipment operation is executed through a specialized transport company, the following must be observed: a. The company holds the necessary license from the competent authorities. b. An agreement is signed between the money exchange company and the transport company clarifying the rights and responsibilities of each party. c. Comprehensive insurance is provided for the full value of the transferred funds.

Article (7) Prohibitions

A money exchange company is prohibited from dealing with virtual or shell external financial institutions.

Article (8) Penalties

Any person who violates the provisions of these Instructions shall be punished in accordance with the provisions of Decision No. (41) of 2016 concerning the licensing and regulation of the money exchange profession, and the provisions of the prevailing Anti-Money Laundering and Terrorist Financing Law and its amendments.

Article (9) Repeal of Conflicting Provisions

All provisions conflicting with these Instructions are hereby repealed.

Article (10) Implementation and Enforcement

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

Issued in Ramallah on: 17 / 04 / 2022.

Dr. Firas Malham Governor [Signature]

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[Palestine Monetary Authority Contact Information]

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Annex No. (1) Exchange of Cash Currency for Another Cash Currency Circulating in Palestine

Details of the Cross-Border Financial Operation: Date of Request:

Expected Transaction Execution Date	Currency/Sold	Denominations	Currency Nature (Fit for Use, Damaged...)	Value of Currency/Sold	Currency/Bought	Denominations	Value of Currency/Bought	Exchange Rate	External Financial Institution for Transaction	Country

Company Stamp: Name of Money Exchange Company:

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Annex No. (2) Exchange of Cash Currency for a Financial Remittance in the Same Currency or Another

Details of the Cross-Border Financial Operation: Date of Request:

Transaction Execution Date	Currency/Sold	Denominations	Currency Nature (Fit for Use, Damaged...)	Value of Currency/Sold	Currency/Bought	Value of Currency/Bought	Exchange Rate	External Financial Institution for Transaction	External Bank (Remittance Source)	Local Bank (Remittance Receiver)	Country

Company Stamp: Name of Money Exchange Company:

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Annex No. (3) Issuance of Financial Remittance Against Bringing Cash Currency

Details of the Cross-Border Financial Operation: Date of Request:

Transaction Execution Date	Currency/Bought	Denominations	Value of Currency/Bought	Currency/Sold	Value of Currency/Sold	Exchange Rate	Local Bank (Remittance Source)	External Bank (Remittance Receiver)	External Financial Institution for Transaction	Country

Company Stamp: Name of Money Exchange Company:

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Annex No. (4) Issuance of Financial Remittance in Cash Currency Against a Financial Remittance in Another Currency

Details of the Cross-Border Financial Operation: Date of Request:

Remittance Issuance Date	Local Bank Name	Remittance Value	Remittance Currency	External Financial Institution for Transaction	Exchange Rate	Remittance Receipt Date	External Bank	Remittance Currency/Currencies	Remittance Value	Country

Company Stamp: Name of Money Exchange Company: