Law No. 41 of 2022 Concerning the National Payments

Law No. 41 of 2022 Concerning National Payments

President of the State of Palestine Chairman of the Executive Committee of the Palestine Liberation Organization

Based on the Basic Statute of the Palestine Liberation Organization, and the Basic Law of 2003 and its amendments, and after reviewing Law No. (2) of 1997 concerning the Palestinian Monetary Authority and its amendments, and Law No. (4) of 2001 concerning Evidence in Civil and Commercial Matters and its amendments, and Legislative Decree No. (9) of 2010 concerning Banks and its amendments, and Legislative Decree No. (15) of 2017 concerning Electronic Transactions, and upon the proposal of the Council of Ministers dated 2021/12/13, and based on the powers vested in us, and in pursuit of the public interest, we have issued the following Legislative Decree:

Article (1) Definitions

For the purposes of applying the provisions of this Legislative Decree, the following words and expressions shall have the meanings specified below, unless the context indicates otherwise:

Monetary Authority: The Palestinian Monetary Authority. Payment System: A set of instruments, procedures, and rules for transferring funds between members or among them. The system includes the members and the operator. Operator: The Monetary Authority or a person licensed by the Monetary Authority to operate the payment system. Electronic Signature: Electronic data used by a person to sign, and which is logically attached to or associated with other electronic data. Digital Financial Identity: A set of tools and procedures used to identify a specific individual, aggregating electronic attributes and characteristics for the purpose of benefiting from financial services in accordance with this Legislative Decree and prevailing legislation in Palestine. Authentication: Procedures that enable the verification of the user's identity. Electronic Financial Transfer: A transfer order for funds or securities that is performed or executed wholly or partially by electronic means. Collateral: Assets provided by a member to ensure sufficient liquidity to meet its obligations in the payment system. Financial Instrument: All financial instruments issued by the Monetary Authority or issued by the Monetary Authority on behalf of the Palestinian Government, including treasury bills, debt instruments, certificates of deposit, bonds, and any other financial instruments. Electronic Document: Any content stored electronically, whether text, audio, visual, or audiovisual. Electronic Record: A set of information that collectively describes a natural or legal person or relates to payment services, which is created, sent, received, or stored by electronic means. Payment Services: Services determined by the Monetary Authority related to sending, receiving, and executing payment orders in circulating currencies, including the issuance and management of payment instruments and the operation of payment systems. Payment Order: Instructions issued by a payer or beneficiary to a member or company to execute a payment transaction in any circulating currency for the purpose of transferring or withdrawing funds, regardless of any obligations between the payer and the beneficiary. Payment Instrument: A dedicated device or devices, also including a set of agreed procedures for use to execute a payment transaction. Irrevocability: A payment order or transfer issued by the user that cannot be revoked or cancelled. Net Financial Positions: The net payment obligations or the net value of settlement obligations on a member in the payment system. Payment Services Company: A company registered in accordance with the law and licensed to provide payment services. Financial Technology Company: A company registered in accordance with the law and licensed to provide financial technology services. Company: A payment services company or a financial technology company. Electronic Know Your Customer (e-KYC) Register: The central "Know Your Customer" database supervised by the Monetary Authority to facilitate customer inquiry processes and the application of due diligence provisions by financial institutions electronically. Electronic Money: Electronically stored monetary value that constitutes an obligation on the issuer, issued in exchange for funds for the purpose of executing a payment order between users of payment services. Electronic Money Collateral Account: The account opened by the company with any licensed bank to match the outstanding balance of electronic money issued by the company in accordance with the conditions determined by the Monetary Authority. Person: A natural or legal person. User: The person who uses payment services and financial technology services as a payer or beneficiary. Member: A legal person licensed to exchange, clear, and settle transactions directly or indirectly in accordance with the instruments, procedures, and rules of the payment system. Virtual Assets: A digital representation of value or rights that can be traded, transferred, or stored electronically, and can be used for payment or investment purposes. Virtual assets do not include the digital representation of official currencies, securities, and other financial assets. Virtual Asset Service Provider: A person who performs one or more of the activities or operations related to virtual assets, including transferring, exchanging, managing, or holding them, on behalf of or for the benefit of any other person. Direct Debit: An agreement under which the payer grants the beneficiary the right to issue instructions to the member to execute one or more direct debit orders on the payer's account for the benefit of the beneficiary, specifying the value and due date of each installment. Direct Debit Order: A payment order involving a debit from the payer's account for the benefit of the beneficiary upon request, in accordance with the instructions contained in the direct debit mandate.

Article (2) Scope of Application

The provisions of this Legislative Decree shall apply to:

1. The payment system, the operator, payment services companies, financial technology companies, and virtual asset service providers.
2. All non-cash payment orders and transactions that the parties agree to execute by electronic means.
3. All electronic financial transfers, electronic records, electronic signatures, and any transfers or settlements carried out using payment instruments for the purpose of providing payment services.
4. Electronic clearing of checks and financial instruments.

Article (3) Objective of the Legislative Decree

This Legislative Decree aims to:

1. Regulate and facilitate the use of electronic means in conducting financial transactions, while respecting the provisions of any other laws.
2. Regulate and facilitate the use of new types of payment services in light of the development of financial technology.
3. Regulate and facilitate electronic correspondence via reliable electronic records.
4. Regulate and facilitate e-commerce and other electronic transactions and enhance the development of the legal and commercial infrastructure for the secure implementation of e-commerce.
5. Regulate and facilitate the use of electronic authentication and electronic documents related to payment and fund transfers.
6. Reduce cases of forgery of electronic correspondence and subsequent alterations to such correspondence, and reduce opportunities for fraud in e-commerce and other electronic transactions.
7. Establish uniform principles for rules, regulations, and standards related to the authentication and integrity of electronic correspondence and transactions.
8. Enhance public confidence in the integrity and validity of electronic transactions, correspondence, and records.
9. Enhance the development of e-commerce and other transactions at the local and global levels by using electronic signatures.

Article (4) Electronic Signature for Financial Institutions

1. An electronic signature shall be considered valid if it can be verified in accordance with authentication procedures stipulated in prevailing legislation, and in all cases, the following conditions must be met: a. It must be unique to the signatory and capable of identifying them. b. It must be created by means under the sole control of the signatory. c. It must ensure a link to the document to which it relates in a manner that detects any subsequent alteration to it.
2. The Monetary Authority shall issue instructions regulating the form and mechanisms for applying the electronic signature for financial institutions.

Article (5) Digital Financial Identity and Electronic Know Your Customer (e-KYC) Register

1. The Monetary Authority shall issue instructions regulating the issuance, protection, use, handling, and information exchange of the Digital Financial Identity.
2. The Monetary Authority shall issue instructions regulating the creation and management of the infrastructure for the Digital Financial Identity and its supervision.
3. The Monetary Authority shall establish the necessary infrastructure to activate and apply the Digital Financial Identity to customers of financial institutions.
4. The Monetary Authority shall establish an Electronic Know Your Customer (e-KYC) register to enable financial institutions to authenticate, identify, and verify the Digital Financial Identity data of clients.
5. The Monetary Authority shall issue instructions regulating the creation and management of the infrastructure for the Electronic Know Your Customer (e-KYC) register and its supervision.

Article (6) Net Financial Positions and Finality of Payments

1. Electronic records, electronic contracts, electronic messages, electronic transactions, and electronic signatures shall produce the same legal effects as written documents, written signatures, and written transactions under prevailing legislation, in terms of binding their parties or their admissibility as evidence.
2. All electronic financial transfers carried out in accordance with the provisions of this Legislative Decree shall have legal evidentiary value against their parties.
3. For the purpose of executing payment transactions, the expression of offer and acceptance shall be in the manner agreed upon between the member or company and the user, including electronic means.
4. Net financial positions shall be binding on all.
5. Payment orders received by the payment system shall be final and irrevocable or non-challengeable, in accordance with instructions issued by the Monetary Authority.

Article (7) Supervisory Powers and Service Provision

1. The Monetary Authority is exclusively authorized to supervise payment systems in accordance with instructions issued for this purpose.
2. The Monetary Authority is exclusively authorized to provide payment settlement, clearing, and securities payment settlement services related to members. To achieve this, it may establish, operate, or participate in the ownership of any payment system.
3. The Monetary Authority is exclusively authorized to supervise payment services companies, financial technology companies, and virtual asset service providers in accordance with instructions issued for this purpose.
4. Electronic records held by the Monetary Authority or any legally authorized entity shall be relied upon to prove ownership and pledge of securities. The Monetary Authority shall issue necessary instructions for the management of collateral that can be used and accepted as security for settlement and procedures for its liquidation.
5. The Monetary Authority may take mandatory measures against any of the entities under its supervision as the supervisor of clearing and settlement systems, and take corrective and punitive measures against any person in accordance with the provisions of the law.

Article (8) Licensing

1. It is prohibited for any person to provide any payment services or financial technology services without obtaining a license from the Monetary Authority.
2. The Monetary Authority shall issue instructions regulating the provision of payment services and financial technology services in accordance with the following: a. Licensing conditions and requirements for payment services companies and financial technology companies. b. Activities permitted to be conducted by electronic means, and the required operational systems, security and protection systems, and their implementation, monitoring, and development. c. Conditions and specifications for electronic records, as well as for electronic contracts, messages, and transactions. d. Rights and obligations of each party to any electronic transaction. e. Mechanisms, conditions, and duration for retaining electronic documents, records, or information, and the form of their storage. f. Conditions required for an electronic document or record to be considered original. g. Obligations arising from any electronic transactions, as well as the time of execution and settlement of transactions, and the obligations of the parties in this regard. h. Conditions and limits for electronic financial transfers and the specified period for such. i. Conditions for transferable or negotiable electronic instruments, provided they do not conflict with the provisions of other laws. j. Minimum and maximum limits for fees and commissions charged by payment services companies and financial technology companies for all types of services provided. k. Issuing instructions, standards, and procedures necessary to regulate executed operations, and issuing any instructions deemed appropriate to achieve the objectives of this Legislative Decree.
3. For the purpose of registration with the Ministry of National Economy and completing the licensing request, any person wishing to provide any payment services, financial technology services, or virtual asset services must obtain the Monetary Authority's written approval prior to registration in accordance with instructions issued by the Monetary Authority.

Article (9) Electronic Money Collateral Account

1. The company must deposit all funds received in exchange for electronic money in an Electronic Money Collateral Account with a bank in Palestine in accordance with instructions issued by the Monetary Authority.
2. The Electronic Money Collateral Account shall be independent of the company's financial accounts and shall constitute security for the rights of users of electronic money issued by the company.
3. Execution shall not be carried out against the Electronic Money Collateral Account for any debts, dues, or rights incurred by the company, except for debts and dues specific to users of electronic money.
4. The Electronic Money Collateral Account is exempt from procedures for dissolution, bankruptcy, or liquidation of the company or bank as stipulated by law.
5. The Monetary Authority shall issue instructions determining the conditions and terms specific to the Electronic Money Collateral Account.

Article (10) Supervision and Inspection

1. The Monetary Authority may appoint one or more inspectors to inspect companies and virtual asset service providers at any time to examine books, records, automated systems, and financial data. Inspection shall include any of the following: a. Verifying the integrity of the financial position, capital adequacy, asset quality, effectiveness and risks of operations, management evaluation, service quality, and liquidity availability to meet operational requirements. b. Evaluating the performance of internal control and compliance with the provisions of this Legislative Decree and instructions issued thereunder. c. Verifying the integrity and efficiency of automated systems used, the availability of dual control and segregation of duties, the adequacy and accuracy of their outputs, their fulfillment of business needs, and Monetary Authority requirements. d. Verifying the availability of policies, standards, and work procedures that ensure operations are conducted within their proper framework, compliance with them, and their updating to keep pace with developments in the business environment.
2. The company and virtual asset service provider must provide the Monetary Authority's inspectors assigned to the examination and inspection with all required books, records, accounts, documents, and any other requirements necessary to complete the examination and inspection process.
3. The company and virtual asset service provider must provide the Monetary Authority with the necessary financial and statistical data for supervision purposes, as well as audited financial statements, the external auditor's opinion, and any data and information related to their operations periodically in accordance with instructions issued by the Monetary Authority for this purpose.
4. Monetary Authority employees assigned to supervision and inspection shall have the status of judicial police officers within their jurisdiction.

Article (11) Collateral

1. The operator may liquidate collateral and take appropriate measures in the event that any member is unable or likely to be unable to meet its obligations.
2. The Monetary Authority shall issue necessary instructions to regulate collateral and liquidation procedures.

Article (12) Fees and Service Charges

The Monetary Authority shall collect the following fees from those subject to the provisions of this Legislative Decree:

1. Monthly membership fees in the payment system, capped at (5,000) five thousand US dollars or its equivalent in the legally circulating currency for each month.
2. Check clearing and transaction settlement fees, capped at (5) five US dollars or its equivalent in the legally circulating currency for each check or transaction.
3. The Monetary Authority shall collect the following fees from the company: a. Non-refundable license application fee of (1,000) one thousand US dollars or its equivalent in the legally circulating currency. b. One-time license fee of (20,000) twenty thousand US dollars or its equivalent in the legally circulating currency. c. Annual license fee of (5,000) five thousand US dollars or its equivalent in the legally circulating currency.
4. The Monetary Authority shall collect the following fees from the virtual asset service provider: a. Non-refundable license application fee of (5,000) five thousand US dollars or its equivalent in the legally circulating currency. b. One-time license fee of (20,000) twenty thousand US dollars or its equivalent in the legally circulating currency. c. Annual license fee of (10,000) ten thousand US dollars or its equivalent in the legally circulating currency.
5. The Monetary Authority shall issue necessary instructions to implement the provisions of this Article.

Article (13) Company Register and Virtual Asset Service Providers

1. The Monetary Authority shall maintain a central register of all licensed companies and virtual asset service providers.
2. The Monetary Authority shall publish on its website and any other advertising medium it deems appropriate a list of names of companies and virtual asset service providers licensed by the Monetary Authority.
3. The Monetary Authority may classify companies into categories in accordance with instructions issued by it.

Article (14) Virtual Assets

1. It is prohibited for any person or any other entity to trade virtual assets or work as a virtual asset service provider in the State of Palestine until they are regulated by the Monetary Authority based on instructions issued for this purpose.
2. Competent authorities, in coordination with the Monetary Authority, shall identify persons dealing with virtual assets or virtual asset service providers without a license and refer them to the Public Prosecution.

Article (15) Direct Debit

1. Any person may issue a direct debit for future installments. The direct debit order may be either revocable or irrevocable.
2. The payer may cancel a revocable direct debit order at any time.
3. The payer is prohibited from cancelling an irrevocable direct debit order except with the consent of the beneficiary or by a decision issued by a competent court.
4. The member (drawee) is prohibited from refusing to pay the value of a direct debit order if they have sufficient funds.
5. If the member (drawee) refuses to pay the value of an irrevocable direct debit order, they must prove the reason for refusal to pay via a document issued by them containing the parties to the direct debit, the value of the irrevocable direct debit order, its submission date, and its due date.
6. The document issued by the member in accordance with the provisions of paragraph (5) of this Article shall be considered an executive document in accordance with the provisions of the law.
7. The Monetary Authority shall issue instructions regulating the implementation of the provisions of this Article.

Article (16) Combating Money Laundering

Those subject to the provisions of this Legislative Decree must comply with the provisions of the prevailing Combating Money Laundering and Terrorist Financing Law and the systems and instructions issued thereunder.

Article (17) Violations and Penalties

1. The member must maintain sufficient balances in its accounts to settle clearing results and cover net financial positions.
2. The Monetary Authority may impose any of the following penalties if it is established that the company or virtual asset service provider has violated the provisions of this Legislative Decree and instructions issued thereunder: a. Issuing a preliminary warning. b. Issuing a final warning. c. Temporarily suspending the provision of service(s). d. Permanently suspending the provision of service(s). e. Imposing a financial fine on the company or virtual asset service provider not less than (3,000) three thousand US dollars and not exceeding (250,000) two hundred and fifty thousand US dollars or its equivalent in legally circulating currencies. f. Revoking the license granted to the company or virtual asset service provider.
3. Anyone who violates the provisions of this Legislative Decree and instructions issued thereunder shall be punished as follows: a. By a fine not less than (5,000) five thousand US dollars and not exceeding (250,000) two hundred and fifty thousand US dollars or its equivalent in the legally circulating currency in the event of insufficient balances after the end of the working day. b. By a fine not less than (50) fifty US dollars and not exceeding (20,000) twenty thousand US dollars or its equivalent in the legally circulating currency in the event of insufficient balances at the end of the specified settlement time and before the end of the working day.
4. Anyone who engages in the activity of providing payment services, financial technology services, or dealing with virtual assets without obtaining the approvals and licenses required under the provisions of this Legislative Decree and instructions issued thereunder shall be punished by imprisonment for a period not less than two weeks and not exceeding two years, or by a financial fine not less than (2,000) two thousand US dollars and not exceeding (50,000) fifty thousand US dollars or its equivalent in the legally circulating currency, or by both penalties.
5. Anyone who engages in payment services, financial technology services, or dealing with virtual assets without obtaining licenses shall be referred to the Attorney General to take the necessary legal action.

Article (18) Issuance of Instructions and Decisions

The Board of Directors of the Monetary Authority shall issue the necessary instructions and decisions to implement the provisions of this Legislative Decree.

Article (19) Regularization of Status

Persons engaged in the activity of providing payment services and financial technology services are granted a period of six months from the date of entry into force of this Legislative Decree to regularize their status in accordance with its provisions. This period may be extended once for a period not exceeding six months in accordance with a decision by the Monetary Authority.

Article (20) Repeal of Conflicting Provisions

1. Legislative Decree No. (17) of 2012 concerning the National Payments Settlement Law is repealed.
2. All systems, instructions, decisions, and guidelines issued by the Monetary Authority shall remain in force to the extent that they do not conflict with the provisions of this Legislative Decree, until they are repealed and new systems, instructions, and guidelines are issued under the provisions of this Legislative Decree.
3. Anything conflicting with the provisions of this Legislative Decree is repealed.

Article (21) Entry into Force

All competent authorities shall, each within their respective jurisdiction, implement the provisions of this Legislative Decree, and it shall be enforced from the date of its publication in the Official Gazette.

Issued in Ramallah on: 2022/08/08 Gregorian Corresponding to: 10 Muharram 1444 Hijri

Mahmoud Abbas President of the State of Palestine Chairman of the Executive Committee of the Palestine Liberation Organization