Palestine Monetary Authority

PALESTINE MONETARY AUTHORITY

Instructions No. (1) of 2018

Regarding the Licensing of Payment Service Companies

Based on the provisions of Decision-Law No. (17) of 2012 concerning the National Payment Marketing Law, particularly Articles (5) and (9) thereof, and in the public interest, and in accordance with the powers delegated to us, we have issued the following Instructions:

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Chapter One

Definitions and Scope of Application

Article (1)

Definitions

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

• Person: A natural or legal person.
• Payment Service: All services related to the management, sending, receiving, and execution of payment orders in any currency, including providing electronic payment services and operating a payment system.
• Payment System: The electronic system or arrangement for executing or marketing payment obligations, and for the purposes of these Instructions, includes all services related to the management and operation of clearing and electronic transfer systems among its members.
• Payment System Service Provider: The company licensed by the Palestine Monetary Authority to operate a payment system.
• Electronic Payment Service: All services related to sending, receiving, and executing electronic payment orders in any currency for clients.

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Chapter Two

Licensing

Article (3)

Licensing Provisions

1. No person shall provide a payment service except through a company registered in accordance with prevailing laws whose purpose is to provide a payment system service or electronic payment services.
2. No company whose purpose is to provide a payment service shall be registered except after obtaining prior written approval from the Palestine Monetary Authority.
3. No person shall use the term "payment service" or its synonyms or any other expression resembling it in any language in its documents, publications, or trade name unless it holds a license or prior written approval from the Palestine Monetary Authority.
4. The Palestine Monetary Authority may request the competent authorities to take the necessary legal action against any person found to be providing payment services without obtaining prior approval from it.
5. The Palestine Monetary Authority may request a person to provide itself, its documents, and accounts if there is suspicion that it is engaging in payment service activities without obtaining the necessary license.

Article (4)

Licensing Application

1. The licensing application shall be submitted to the Palestine Monetary Authority by the founders in accordance with Appendix No. (1), containing all required documents and papers for consideration of the application.
2. The Palestine Monetary Authority shall respond in writing to the applicant within one month from the date of receipt of the application regarding its completeness, and the response shall specify the deficiencies that must be provided to the Authority to rule on the application.
3. The deficiencies, if any, shall be completed within three months from the date of the response, otherwise it shall be considered a withdrawal of the application by the applicant.
4. The application shall be considered complete after providing the Palestine Monetary Authority with all required documents and papers.
5. The Palestine Monetary Authority shall take a decision on the application within one month from the date of its completeness and shall notify the applicant of its decision.

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Chapter Three

Payment System Service

Article (5)

Register of Payment Service Providers

1. The Palestine Monetary Authority shall maintain a central register of all payment service providers.
2. The Palestine Monetary Authority shall publish on its website and any advertising medium it deems appropriate a list of names of payment service providers licensed by the Authority.
3. The Palestine Monetary Authority may classify payment service providers into categories according to the systemic importance of the services provided.

Article (6)

Preliminary Approval

1. The entity applying for preliminary approval to license a payment system service shall provide the Palestine Monetary Authority with the following documents:

   a. Draft memorandum of association and internal regulations of the company.
   b. Names, nationalities, places of residence, and curricula vitae of the founders, including qualifications, experience, and supporting documents.
   c. Certificate of non-conviction for each founder issued by the competent authorities in Palestine.
   d. Economic feasibility study, estimated budgets, and potential company partners for the first three years of operation for realistic estimates.
   e. Draft strategic business plan of the company for the next five years.
   f. Written explanatory presentation on the type of payment system service, its objectives, a description of its operating mechanisms, support for subscribers and beneficiaries, planned distribution locations, and any other explanatory presentations that the Authority may request.
   g. Description of operational policies and procedures to be used, including:

   1. Customer service, dispute resolution, and anti-money laundering.
   2. Information security and protection.
   3. Internal control procedures and risk management.

   h. Written letter from the founders regarding the following:

   1. That none of the founders have been declared bankrupt or unable to pay their debts unless their reputation has been restored.
   2. That none of the founders have been convicted by a competent court with a final judgment for crimes of theft, embezzlement, forgery, defamation, bribery, credit abuse, or any crime involving honor, trust, or public morals, or any money laundering crime.
   3. Sound credit performance, including that none of the founders have defaulted on any of their banking obligations.

2. The preliminary approval shall be considered void if all requirements and conditions necessary to obtain the license are not met within a period of one year from the date of obtaining the preliminary approval, except in cases where the Palestine Monetary Authority decides otherwise.

Article (7)

Requirements for Licensing a Payment System

1. The applicant for the Palestine Monetary Authority's final written approval to license a payment system service shall provide the Authority with the following data and documents:

   a. Memorandum of association and internal regulations of the company.
   b. Organizational structure of the company and operational procedures manual.
   c. Lease contract or ownership deed for the company's general/regional headquarters in Palestine.
   d. Documents proving the actual full payment of capital as specified by the Palestine Monetary Authority.

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Chapter Four

Electronic Payment Service

Article (10)

1. The entity applying for preliminary approval to license an electronic payment service shall provide the Palestine Monetary Authority with the following documents:

   a. Draft memorandum of association and internal regulations of the company.
   b. Names, nationalities, places of residence, and curricula vitae of the founders, including qualifications, experience, and supporting documents.
   c. Certificate of non-conviction for each founder issued by the competent authorities in Palestine.
   d. Economic feasibility study, estimated budgets, and potential company partners for the first three years of operation for realistic estimates.
   e. Draft strategic business plan of the company for the next five years.
   f. Description of the general framework of the payment system, its feasibility, its operational foundations and models, its documented or planned relationship with other systems, as well as information about the entity providing it.
   g. Description of operational policies and procedures, which shall include at a minimum the following:

   1. System participation criteria and conditions.
   2. Clearing and settlement mechanism.
   3. Draft operational rules of the system.
   4. Service level to be provided to subscribers.
   5. Risk analysis and measures to mitigate system risks arising from liquidity.
   6. Participants' defaults and the ability to manage these risks.
   7. Measures taken to secure and protect electronic operations and preserve and store data related to the system and its participants against misuse, damage, loss, or theft.
   8. System subscription fee plan.
   9. Information on system maintenance service. h. Strategic business plan of the company for the next five years.
      i. Description of governance procedures, internal control standards, reporting lines and frequency, risk management, business continuity, accounting registration procedures, and the plan ensuring service provision and continuity.
      j. Clarification of the controls to be adopted to comply with prevailing anti-money laundering requirements and procedures in Palestine.
      k. The designated settlement bank to be dealt with for marketing the results of the payment service, necessary banking guarantees, and contractual terms.

2. The Palestine Monetary Authority may entrust any entity it deems appropriate, at the company's expense, to verify the accuracy of the data provided by the company and its readiness.

Article (8)

Appointment of Executive Management

1. Prior written approval from the Palestine Monetary Authority must be obtained for the appointment of the General Manager, Operations Manager, and Information Technology Manager of the payment system service provider.

2. The Palestine Monetary Authority may refuse to approve the appointment of the General Manager, Operations Manager, or Information Technology Manager in the following cases:

   a. If none of them possess sufficient academic qualifications and practical experience.
   b. If none of them possess sufficient skills and experience in the field of payment system operations.
   c. If any of them caused losses to a banking institution, specialized lending institution, or any other institution where they served as a senior executive or board member.
   d. If any of them have been declared bankrupt or unable to pay their debts unless their reputation has been restored.
   e. If any of them have been convicted by a competent court with a final judgment for crimes of theft, embezzlement, forgery, defamation, bribery, credit abuse, or any crime involving honor, trust, or public morals, or any money laundering crime, unless their reputation has been restored.

3. The Palestine Monetary Authority may dismiss or suspend the General Manager, Operations Manager, or Information Technology Manager from their duties if they violate the provisions of the National Payment Law and the instructions issued thereunder, or commit any acts that cause severe losses to the company they work for or expose it to risks.

Article (9)

Imposing Changes on a Systemically Important Payment System Service Provider

For the purpose of ensuring financial stability, the Palestine Monetary Authority may impose restrictions or obligations on a systemically important payment system service provider regarding the following:

1. Conditions for access to or subscription in the important payment system service and agreements arising therefrom.
2. Operations of the important payment system service, including clearing and settlement arrangements and agreements arising therefrom.
3. Interconnection between the important payment system service and other systems.
4. Interconnection between the important payment system service and its subscribers.
5. Procedures to be taken by any subscriber or group of subscribers or the important payment system service provider regarding any system operation.
6. Procedures for winding down the operations of the important payment system service.
7. Risk management.
8. Conditions related to confirming settlement finality.
9. Financial conditions and requirements related to liquidity and inter-subscriber guarantees.
10. Operational and financial effectiveness of the important payment system service regarding clearing arrangements.
11. Conditions to be followed in cases of outsourcing any functions of the important payment system service.
12. Conditions to be followed to mitigate operational risks and ensure system continuity and business recovery through business continuity plans.
13. Availability of technical and functional requirements to connect the important payment system service to managed clearing and settlement systems.
14. Conditions to be followed to comply with the Principles for Financial Market Infrastructures issued by the Bank for International Settlements and as the Palestine Monetary Authority deems appropriate.

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Note: The text is taken from an official document issued by the Palestine Monetary Authority, and the text was translated into Arabic only. There is no translation of other texts. The original formatting of the document has been preserved using Markdown formatting marks.