Law No. 40 of 2022 on Licensing and Supervision of the Money Exchange Profession

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Law No. (40) of the Year 2022 Concerning the Licensing and Supervision of the Money Exchange Profession

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

Based on the Basic Statute of the Palestine Liberation Organization, and the Basic Law amended in the year 2003 and its amendments, and after reviewing Law No. (2) of the year 1997 concerning the Palestinian Monetary Authority and its amendments, and on Decision-Law No. (42) of the year 2021 concerning Companies, and on Decision-Law No. (39) of the year 2022 concerning Combating Money Laundering and Financing of Terrorism, and on Presidential Decision No. (41) of the year 2016 concerning the System for Licensing and Supervision of the Money Exchange Profession, and on the letter from the Palestinian Monetary Authority dated 2022/07/20, and based on the powers delegated to us, and in pursuit of the public interest,

We have issued the following Decision-Law:

Chapter One Definitions and General Provisions

Article (1) Definitions

The words and expressions used in this Decision-Law shall have the meanings assigned to them below, unless the context indicates otherwise:

Authority: The Palestinian Monetary Authority. Governor: The Governor of the Palestinian Monetary Authority. Council: The Board of Directors of the Palestinian Monetary Authority. Person: A natural or legal person. Money Exchanger: A natural or legal person licensed by the Authority to conduct money exchange activities under the provisions of this Decision-Law. Applicant: The person who has submitted an application to the Authority for a license to conduct money exchange activities. Money Exchange Activities: The activities specified in Article (9) of this Decision-Law. Branch: A workplace that constitutes a legally subordinate part of the Money Exchanger, where all or some of the money exchange activities are conducted. Correspondent Company: A money exchange company or bank operating outside Palestine with which the Money Exchanger deals.

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Article (2) Objectives of the Decision-Law and Scope of Application

1. This Decision-Law aims to regulate money exchange activities and preserve the integrity, effectiveness, and stability of the financial and monetary system.
2. The provisions of this Decision-Law shall apply to all Money Exchangers in accordance with the provisions contained herein.

Chapter Two Licensing Provisions

Article (3) Licensing

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

Article (4) Licensing Procedures

1. The Authority shall respond in writing to the Applicant within (30) days from the date of receipt of the application regarding the completeness of the application, and the response shall specify the deficiencies that must be provided to the Authority to consider the application.
2. The deficiencies must be completed within (60) days from the date of the response; otherwise, the license application shall be considered withdrawn.
3. The Authority shall issue a written decision within (30) days from the date of the completion of the application. The decision shall be reasoned in case of rejection.

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4. In case of approval, the Authority shall grant the Applicant a period of (6) months to complete the procedures and requirements for obtaining final approval. The Authority may extend this period by another (6) months. The approval shall be automatically revoked if the procedures and requirements are not completed within the granted period.
5. The Money Exchanger must commence its activities within a maximum period of (90) days from the date of granting final approval.
6. If the Money Exchanger does not commence its activities within the period specified in paragraph (5) of this Article, it may submit a letter explaining the reasons that prevented it from commencing work.
7. The Authority may, upon accepting the reasons stated in the Money Exchanger's letter, extend the period for a non-renewable period of (30) days.
8. The license shall be automatically revoked if the Money Exchanger who was granted final approval to conduct its activities does not commence them within the period specified in paragraphs (5) and (7) of this Article.

Article (5) Renewal of License

The Authority shall issue the necessary instructions for the renewal of the license.

Article (6) Exclusivity, Transfer, and Closure

The Authority shall issue the necessary instructions regarding exclusivity, transfer, and closure.

Article (7) Money Exchangers Register

1. The Authority shall maintain a central register of all Money Exchangers.
2. The Authority shall publish a list of Money Exchangers' names on its website.

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

1. The Authority shall collect the following fees from the Money Exchanger:
   • A fee for submitting a license application.
   • A one-time license fee upon granting the license.
   • An annual license fee for the headquarters and branches. The Authority may collect a financial allowance for any services provided to the Money Exchanger, determined by instructions issued by the Authority for this purpose.
2. The license application fee shall be paid when submitting a new license application or for establishing a branch.
3. The annual license fee shall be paid at the beginning of the Gregorian calendar year and no later than January 31 of each year.

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4. The annual license fee for a license granted during the year to a new Money Exchanger or new branches shall be calculated based on the percentage of the number of months of the year, starting from the date of issuance of the license. Fractions of a month shall be considered a full month for the purpose of calculating the fee.
5. The Council may exempt the Money Exchanger from the annual license fee or part of it if it ceases to conduct its activities in accordance with the provisions of this Decision-Law.
6. The Authority shall issue instructions determining the fees mentioned in paragraph (1) of this Article.
7. The Authority may collect a cash deposit from the Money Exchanger in accordance with instructions issued for this purpose.

Chapter Three Permitted and Prohibited Activities

Article (9) Permitted Activities

1. The Money Exchanger may conduct the activities mentioned in paragraph (2) of this Article, subject to the conditions and requirements determined by the Authority through instructions issued for this purpose.
2. Subject to what is stated in paragraph (1) of this Article, the Money Exchanger may conduct the following activities:
   • Buying and selling various currencies.
   • Buying and selling unprocessed precious metals.
   • Opening and using accounts in various currencies with correspondent companies.
   • Issuing and accepting drafts within Palestine.
   • Issuing and accepting drafts outside Palestine.
   • Any other financial activity permitted by the Authority through instructions issued for this purpose.

Article (10) Prohibited Activities

Subject to Article (9) of this Decision-Law, the Money Exchanger is prohibited from conducting the following activities:

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

Chapter Four Management of the Money Exchanger

Article (11) Articles of Association and Internal Regulations

When registering a money exchange company, prior written approval from the Authority must be obtained for the draft Articles of Association and Internal Regulations. No amendments shall be made to them without obtaining prior written approval from the Authority.

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Article (12) Policies and Internal Regulations

1. The Money Exchanger must establish internal policies, systems, and procedures that ensure the proper conduct of its business.
2. The Money Exchanger must periodically review its policies, systems, and internal procedures.
3. The Authority may determine the requirements and conditions to be met by employees of the Money Exchanger in accordance with instructions issued for this purpose.

Article (13) Working Hours and Official Holidays

The Authority shall determine working hours and official and religious holidays through circulars issued by it.

Article (14) Confidentiality Requirements

1. The Money Exchanger and all its employees must maintain the confidentiality of information and documents related to clients that come to them in the course of performing their duties. None of them shall disclose any of this information or allow others to access it. This prohibition applies to anyone who gains access to such data and information in the course of their profession, position, or work, directly or indirectly, unless such access is pursuant to the following:
   • Written consent of the client.
   • A judicial ruling issued by a competent court.
2. The following cases are exempt from the confidentiality requirements stated in paragraph (1) of this Article, with these parties obligated to maintain confidentiality regarding the information they obtain:
   • Disclosure of information and documents requested by the Authority or its employees tasked with performing their duties.
   • Disclosure to perform the legal duties of the external auditor as stipulated in this Decision-Law.
   • Disclosure to perform duties specified for legal advisors.
   • Specific disclosure of information in accordance with the provisions of the Law on Combating Money Laundering and Financing of Terrorism and the instructions issued thereunder.
   • Disclosure by the Money Exchanger of some or all information related to client transactions to provide evidence in legal proceedings between them regarding these transactions.
   • The chairpersons of the boards of directors of money exchange companies wishing to merge or acquire in accordance with this Decision-Law, or those authorized by them specifically for this purpose, may exchange necessary information regarding their companies' business to complete the study of the merger or acquisition, provided that prior written approval is obtained from the Authority. These persons shall be personally responsible for maintaining the confidentiality of the information they access in this regard, under legal liability.
3. The Authority shall determine the instructions governing the confidentiality of data related to the Money Exchanger.

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Chapter Five Capital, Profits, and Reserves

Article (15) Capital, Profits, and Reserves

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

Chapter Six Combating Money Laundering and Financing of Terrorism

Article (16) Combating Money Laundering and Financing of Terrorism

1. Subject to the provisions of the prevailing Law on Combating Money Laundering and Financing of Terrorism, no Money Exchanger shall conceal money transfer operations or any other operations while knowing that these funds originate from illegal activities, with the aim of concealing their source or assisting any person involved in these activities to avoid legal accountability.
2. The knowledge referred to in paragraph (1) of this Article means knowledge that can be inferred from realistic and objective circumstances.
3. The Money Exchanger must notify the Financial Monitoring Unit and provide it with suspicion reports and any evidence found, which prove that these funds or properties originate from illegal activities, along with any additional information requested regarding these activities, in accordance with the requirements of the prevailing Law on Combating Money Laundering and Financing of Terrorism.
4. The Authority shall issue instructions related to combating money laundering and financing of terrorism regarding the licensing and supervision of the money exchange profession.

Chapter Seven Accounts and Reports

Article (17) Financial Year

The financial year of the Money Exchanger begins on the first of January and ends on the thirty-first of December of each Gregorian calendar year.

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Article (18) Financial and Accounting Systems

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

Article (19) Internal and External Audit

1. The Authority shall determine the requirements for the internal audit of the Money Exchanger through instructions issued for this purpose.
2. The Money Exchanger must appoint a statutory auditor to audit and review its annual accounts in accordance with instructions issued by the Authority for this purpose.

Article (20) Reports Submitted to the Authority

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

Chapter Eight Other Controls and Requirements

Article (21) Other Controls and Requirements

The Authority shall determine through instructions issued by it the following:

1. Regulating the liquidation process in accordance with the prevailing Companies Law and any other relevant legislation in force in the State.
2. Regulating merger, acquisition, and ownership operations of money exchange companies.
3. Liquidity and its ceilings, ratios, and calculation mechanism.
4. Currencies and fees.
5. Public awareness, fair treatment of customers, and mechanisms for processing citizen complaints.
6. Mechanism for exchanging correspondence with the Authority.
7. Security requirements.
8. Any risks the Money Exchanger may face.

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Chapter Nine Inspection and Supervision

Article (22) Inspection

1. The Authority may appoint one or more inspectors to inspect the Money Exchanger or any of its branches at any time to examine books, records, automated systems, and financial data. The inspection shall include any of the following:
   • Verifying the integrity of the financial position, adequacy of capital, quality of assets, effectiveness and risks of operations, management evaluation, service quality, and availability of liquidity to meet operational requirements.
   • Evaluating the performance of internal control and compliance with the provisions of this Decision-Law and instructions issued thereunder.
   • Verifying the integrity and efficiency of automated systems used, the availability of dual control and segregation of duties, and the adequacy and accuracy of their outputs and their compliance with business needs and Authority requirements.
   • Verifying the availability of policies, standards, and work procedures that ensure the conduct of money exchange activities within their proper framework, compliance with them, and updating them to keep pace with developments in the work environment.
2. The Money Exchanger must provide the inspectors of the Authority tasked with examination and inspection with all books, records, accounts, documents, and any other requirements necessary to complete the examination and inspection process.
3. Employees of the Authority tasked with supervision and inspection shall have the status of judicial police officers within their jurisdiction.

Chapter Ten Violations, Corrective Actions, and Fines

Article (23) Violations and Corrective Actions

1. If the Authority establishes that the Money Exchanger has violated the provisions of this Decision-Law or instructions issued thereunder, it may take one or more of the following actions:
   • Issuing a notice to address and correct the violation.
   • Issuing a decision to immediately stop proceeding with the violation and taking urgent action to address and correct it.
   • Compelling the Money Exchanger to submit a corrective timeline for the actions it intends to take or a detailed description of the actions taken to address violations and correct its status.
   • Rejecting branch establishment requests.
   • Imposing financial fines in accordance with the provisions of this Decision-Law.
   • Temporarily closing the Money Exchanger.
   • Revoking the Money Exchanger's license and striking it from the Money Exchangers' register in accordance with the provisions of this Decision-Law.

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2. The Authority shall issue instructions determining the corrective actions for the Money Exchanger.
3. If any of the actions stipulated in this Article are determined, this shall not waive civil and criminal liability in accordance with the provisions of any other legislation.

Article (24) Imposition of Fines and Penalties

1. Any Money Exchanger who violates the provisions of this Decision-Law and the regulations, instructions, and circulars issued thereunder shall be punished with a financial fine not less than (100) one hundred US dollars and not exceeding (10,000) ten thousand US dollars or its equivalent in the legally circulating currency.
2. The Authority may take the necessary procedures and measures to identify any person conducting money exchange activities or intermediating in them, working as an agent, or transferring money or value without obtaining the necessary approvals and licenses in accordance with this Decision-Law and instructions issued thereunder.
3. Any natural person who conducts money exchange activities or intermediates in them, works as an agent, or transfers money or value without obtaining the necessary approvals and licenses in accordance with this Decision-Law and instructions issued thereunder shall be punished with imprisonment for a period not exceeding one year or a financial fine not less than (2,000) two thousand US dollars and not exceeding (15,000) fifteen thousand US dollars or its equivalent in the legally circulating currency, or both penalties.
4. Any legal person who conducts money exchange activities or intermediates in them, works as an agent, or transfers money or value without obtaining the necessary approvals and licenses in accordance with this Decision-Law and instructions issued thereunder shall be punished with a financial fine not less than (10,000) ten thousand US dollars and not exceeding (50,000) fifty thousand US dollars or its equivalent in the legally circulating currency, or both penalties.
5. Anyone conducting money exchange activities and business without obtaining the necessary approvals and licenses shall be referred to the Public Prosecutor to take legal action in accordance with the provisions of this Article.

Article (25) Revocation of License

The Authority may revoke the license of the Money Exchanger in any of the following cases:

1. If the Money Exchanger obtained the license based on incorrect information.
2. If the Money Exchanger did not commence its activities within the period specified in Article (4) of this Decision-Law.
3. If the Money Exchanger made changes affecting the nature of its activity contrary to the granted license conditions.
4. If the Money Exchanger declared bankruptcy or a liquidation decision was issued against it.
5. If the money exchange company merged or its ownership or part of its ownership was transferred to another company without obtaining prior approval from the Authority.
6. If the Money Exchanger ceased to conduct its activities for a period exceeding (3) months without justified reason.
7. If the Money Exchanger repeatedly fails to comply with this Decision-Law and instructions issued thereunder.
8. If the Money Exchanger requests it.
9. If the Money Exchanger dies as an individual.
10. If the Money Exchanger is convicted by a competent court of a crime involving breach of honor and trust.

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Article (26) Instructions

The Authority shall issue the necessary instructions and circulars to implement the provisions of this Decision-Law.

Article (27) Repeal

1. The instructions, decisions, and circulars issued by the Authority pursuant to Decision No. (41) of the year 2016 concerning the System for Licensing and Supervision of the Money Exchange Profession shall remain in force to the extent that they do not conflict with the provisions of this Decision-Law, until they are amended or repealed and instructions and circulars are issued pursuant to this Decision-Law.
2. Decision No. (41) of the year 2016 concerning the System for Licensing and Supervision of the Money Exchange Profession is repealed.
3. Anything conflicting with the provisions of this Decision-Law is repealed.

Article (28) Entry into Force

All competent authorities shall, each within its jurisdiction, implement the provisions of this Decision-Law, 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

Hamdou Abbas President of the State of Palestine President of the Executive Committee of the Palestine Liberation Organization