Palestine Monetary Authority

PALESTINE MONETARY AUTHORITY

Circular No. (17/2019)

To all global bankers in Palestine Date: Sunday, January 13, 2019

Subject: Instructions on Politically Exposed Persons

Attached are the Instructions of the National Committee for Combating Money Laundering and Terrorist Financing No. (1) for the year 2018, published in Official Gazette Issue No. (149) concerning "Politically Exposed Persons." Accordingly, we emphasize the necessity of full compliance with the provisions of the aforementioned instructions.

Supervision and Inspection Department Palestine Monetary Authority

Attachment: Instructions on Politically Exposed Persons. Copy: The Honorable Financial Monitoring Unit.

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Ramallah & Al-Bireh Governorate - Palestine P.O. Box 452 info@pma.ps | Fax: +970 2 2415310 | Tel: +970 2 2415251 Gaza - Palestine P.O. Box 4026 Fax: +970 8 2844487 | Tel: +970 8 2825713 www.pma.ps

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Palestinian Documents

Issue (149) 2018/11/28

Instructions No. (1) for the year 2018

On Politically Exposed Persons

The National Committee for Combating Money Laundering and Terrorist Financing, Based on the provisions of Law Decree No. (20) for the year 2015 concerning the combating of money laundering and terrorist financing, and its amendments, particularly the provisions of Articles (6) and (14/20) thereof, And based on the powers delegated to us, And to achieve the public interest,

We have issued the following instructions:

Article (1) Definitions

1. The words and phrases contained in these instructions shall have the meanings assigned to them below, unless the context indicates otherwise:

   • The Law: Law Decree No. (20) for the year 2015 concerning the combating of money laundering and terrorist financing, and its amendments.
   • The Committee: The National Committee for Combating Money Laundering and Terrorist Financing, established pursuant to the provisions of Article (19) of the Law.
   • The Unit: The Financial Monitoring Unit, established pursuant to the provisions of Article (23) of the Law.
   • Financial Institution: Any natural or legal person subject to the laws in force in the State of Palestine, whose profession or activities are related to any of the activities specified in Table No. (1) attached to the Law, whether practiced for their own benefit or for the benefit of their family.
   • Designated Non-Financial Businesses and Professions: The businesses and professions specified in Table No. (2) attached to the Law.
   • Client: The natural or legal person who has a business relationship with any of the financial institutions or any of the designated non-financial businesses and professions.
   • Politically Exposed Person: A person, their family members, close associates, and partners who hold or have held, whether in Palestine or abroad, public political positions or senior functions, which include, for example, the positions specified in Article (3) of these instructions.
   • Trust: A legal relationship under which the settlor places assets under the control of the trustee for the benefit of a beneficiary or for a specific purpose, and such assets form assets independent of the trustee's property, and the right to the trustee's assets remains in the name of another person on behalf of the settlor.
   • Legal Arrangement: The legal relationship arising between several parties pursuant to an agreement, including trusts or any similar legal arrangements.

Article (2) Scope of Application

The provisions of these instructions shall apply to financial institutions and designated non-financial businesses and professions, and their branches operating abroad, to the extent permitted by the laws and regulations in force in the countries where those branches operate.

Article (3) Categories of Politically Exposed Persons

The categories of politically exposed persons are graded within the following classification:

1. Public political positions or senior functions, including, for example:

   • a. The Head of State, their advisors, and the heads of institutions affiliated with the Presidency.
   • b. The Prime Minister and members of the Council of Ministers, and those in their stead.
   • c. Deputy Ministers, and those in their stead.
   • d. Directors and General Managers in government jobs and public functions, and those in their stead.
   • e. Directors and heads of public bodies and institutions, and those in their stead.
   • f. The Head and members of the Legislative Council.
   • g. The Head and members of the Judicial Council.
   • h. Judges of courts at all their levels.
   • i. Members of the Public Prosecution.
   • j. Directors and leaders of security agencies, and officials therein, and directors of their administrations and departments in general administrations and governorates.
   • k. Directors and leaders of the Palestinian Public Security, and officials, and directors of administrations and departments of Public Security in general administrations and governorates.
   • l. Leaders and senior ranks in political parties and Palestinian factions, and those with important positions in these parties and factions.

2. Heads, deputies, and directors of institutions or charitable associations and local and foreign non-governmental entities, and members of boards of directors.

3. Ambassadors, consuls, and members of the diplomatic corps.

4. Heads and directors of international organizations, their deputies, and representatives.

5. Executive officials in state-owned companies.

Article (4) Risk-Based Approach

Financial institutions and designated non-financial businesses and professions shall commit to identifying and understanding risks, evaluating them, and applying the risk-based approach in due diligence procedures with politically exposed clients as specified in Article (6) of the Law, and establishing the necessary policies, strategies, and measures for that purpose.

Article (5) Enhanced Due Diligence

In addition to the due diligence procedures specified in Article (6) of the Law, financial institutions and designated non-financial businesses and professions shall take the following measures regarding politically exposed persons:

1. Establishing appropriate systems and policies for risk management to determine whether the client or beneficial owner is a politically exposed person, whether local or foreign, including their family members and close associates.
2. Obtaining senior management approval before establishing a business relationship or continuing a business relationship with them.
3. Taking reasonable measures to determine the source of wealth and funds for politically exposed persons, based on legally recognized data to verify their source.
4. Conducting continuous monitoring of the business relationship, verifying its integrity, and ensuring its proportionality to the financial activity, and exercising special care in their dealings and transactions with any of them, and the purpose of those transactions, and recording the results in special records.

Article (6) Insurance Policy Risks

Financial institutions and designated non-financial businesses and professions shall put in place and take the necessary measures to determine whether a politically exposed person is a beneficiary of a life insurance policy, and if so, they shall do the following:

1. Inform senior management before paying out from life insurance proceeds, and conduct a thorough review of the business relationship.
2. Consider reporting to the Unit on the reporting form approved by the Committee for this purpose.

Article (7) Repeal

1. Instructions No. (1) for the year 2014 concerning Politically Exposed Persons are repealed.
2. Everything inconsistent with the provisions of these instructions is repealed.

Article (8) Entry into Force

All competent authorities shall, each within their respective competence, implement the provisions of these instructions, and they shall be effective from the date of their publication in the Official Gazette.

Issued in the city of Ramallah on: 1/11/2018 AD Corresponding to: 23 Safar/1440 AH

The National Committee for Combating Money Laundering and Terrorist Financing

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Palestine Monetary Authority

PALESTINE MONETARY AUTHORITY

Circular (209/2018)

Wednesday, September 19, 2018 To all banks operating in Palestine

Subject: Politically Exposed Persons (PEPs)

With the Palestine Monetary Authority's keenness to enhance the environment for combating money laundering and terrorist financing in Palestine in accordance with the provisions of Law Decree No. (20) for the year 2015 concerning "combating money laundering and terrorist financing" and the instructions issued by the National Committee pursuant thereto, and in accordance with international standards and resources implicit regarding Politically Exposed Persons (PEPs), we emphasize the following:

1. Full compliance with the provisions of Law Decree No. (20) for the year 2015 and the instructions issued pursuant thereto regarding the management of accounts of these persons and their close associates.

2. Providing it with information on what the bank does regarding the following:

   • a. The extent to which approved policies and work procedures are provided regarding enhancing identification and verification procedures for these persons and their sources of wealth and funds, and exercising enhanced and strengthened due diligence on financial transactions executed on their behalf.
   • b. The extent to which the banking system and the bank's money laundering and terrorist financing combating systems are prepared to:
     • Determine the degree of risk of these persons and classify them within the category of "Politically Exposed Persons and their close associates," providing it with the reasons for classifying clients within that category.
     • Issuing explanations when executing financial transactions on behalf of these persons.

3. Providing it with a periodic (quarterly) report in Excel file format of Politically Exposed Persons and their close associates and the total transactions executed on their behalf, to be provided starting from the end of the third quarter of the current year on a quarterly basis, in addition to the data specified in the attached statement, to be sent by the fifth working day after the end of each quarter to the following email address for the Money Laundering and Terrorist Financing Combating Department: AML-CFT@PMA.PS.

4. Banks must ensure compliance with the National Committee's instructions, in terms of providing and updating policies, procedures, and the banking system, and providing it with an action plan to rectify the situation by the end of the current year at the latest.

Supervision and Inspection Department Palestine Monetary Authority

Attachment: Statement of Politically Exposed Persons and their close associates.

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Ramallah - Palestine P.O. Box 452 | Tel: +970 2 2415250 | Fax: +970 2 2415310 Gaza - Palestine P.O. Box 4026 | Tel: +970 8 2825292 | Fax: +970 8 2844487 Email: info@pma.ps www.pma.ps

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Reporting Form for Politically Exposed Persons (PEPs)

No.	Client Name	Nationality	ID/Passport No.	Relationship Type (Client/Intermediary/Beneficiary)	Bank Name	Account No.	Account Type	Amount	Date of Last Transaction	Notes