Circular No. 185-2022 National Payments Law

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Official Gazette Bureau 66 Reference No.: 193-8-2022 No. 193 2022/08/14 Law Decree No. (41) of 2022 concerning the National Payments System 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 amended in 2003 and its amendments, and after reviewing Law No. (2) of 1997 concerning the Palestinian Monetary Authority and its amendments, and on the Evidence Law in Civil and Commercial Matters No. (4) of 2001 and its amendments, and on Law Decree No. (9) of 2010 concerning Banks and its amendments, and on Law Decree No. (15) of 2017 concerning Electronic Transactions, and on the proposal of the Council of Ministers dated 2021/12/13, and based on the powers vested in us, and to achieve the public interest, we have issued the following Law Decree:

Article 1
Definitions
For the purposes of applying the provisions of this Law Decree, the following words and expressions shall have the meanings assigned to them below, unless the context indicates otherwise:
Palestinian Monetary Authority: The Palestinian Monetary Authority.
Payments 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 Palestinian Monetary Authority or a person licensed by the Palestinian Monetary Authority to operate the payments 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 instruments and procedures used to identify a specific individual, aggregating electronic attributes for the purpose of accessing financial services in accordance with this Law Decree and prevailing legislation in Palestine. Authentication: Procedures that enable verification of the user's identity. Electronic Financial Transfer: A transfer order for funds or securities that is initiated or executed wholly or partially by electronic means. Collateral: Assets provided by a member to ensure sufficient liquidity to meet its obligations in the payments system. Financial Paper: All financial instruments issued by the Palestinian Monetary Authority or issued by the Palestinian Monetary Authority on behalf of the Palestinian Government, including treasury bills, debt instruments, certificates of deposit, bonds, notes, 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 constitutes a description of a natural or legal person, or relates to payments services that are created, sent, received, or stored by electronic means. Payments Services: Services determined by the Palestinian Monetary Authority concerning the sending, receiving, and executing of payment orders in circulating currencies, including the issuance and management of payment instruments and the operation of payments systems. Payment Order: Instructions issued by a payer or payee 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 payee. Payment Instrument: A dedicated device or devices, also including a set of agreed procedures for use in executing 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 net value of settlement obligations on a member in the payments system. Payments Services Company: A company registered in accordance with the law and licensed to provide payments services. Financial Technology Company: A company registered in accordance with the law and licensed to provide financial technology services. Company: A payments services company or a financial technology company. Electronic Know Your Customer Register: The central "Know Your Customer" database supervised by the Palestinian Monetary Authority to facilitate customer inquiries and enable financial institutions to apply due diligence obligations electronically. Electronic Money: Electronically stored monetary value that constitutes a liability on the issuer, issued against funds for the purpose of executing a payment order between users of payments services. Electronic Money Guarantee Account: The company's account opened at any licensed bank to cover the outstanding balance of
electronic money issued by the company in accordance with the conditions specified by the Palestinian Monetary Authority. Person: A natural or legal person. User: The person who uses payments services and financial technology services as a payer or payee. Member: A legal person licensed to directly or indirectly exchange, clear, and settle transactions in accordance with the instruments, procedures, and rules of the payments 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 safeguarding them, on behalf of or for the benefit of any other person. Direct Debit: An agreement under which the payer grants the payee 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 payee, specifying the amount 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 payee, in accordance with the instructions in the direct debit mandate.

Article 2
Scope of Application
The provisions of this Law Decree shall apply to:

1. The payments system, the operator, payments 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 executed using payment instruments for the purpose of providing payments services.
4. Electronic clearing of cheques and financial papers.

Article 3
Objective of the Law Decree
This Law Decree aims to:

1. Regulate and facilitate the use of electronic means in conducting financial transactions, while observing 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 communications 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 secure implementation of e-commerce.
5. Regulate and facilitate the use of electronic authentication and electronic documents related to payments and fund transfers.
6. Reduce cases of forgery of electronic communications and subsequent alterations to such communications, and minimize 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 communications and transactions.
8. Enhance public confidence in the integrity and validity of electronic transactions, communications, and records.
9. Enhance the development of e-commerce and other transactions at the local and international 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 according to strict authentication procedures stipulated in prevailing legislation. In all cases, it must meet the following conditions:
   a. It must be uniquely linked to the signatory and identify them. b. It must be created by means that the signatory retains under their sole control.
   c. It must ensure a link to the associated document in such a way that any subsequent alteration to it is detectable.
2. The Palestinian Monetary Authority shall issue instructions regulating the form and mechanisms for applying electronic signatures for financial institutions.

Article 5
Digital Financial Identity and Electronic KYC Register

1. The Palestinian Monetary Authority shall issue instructions regulating the issuance, protection, use, handling, and information exchange of the Digital Financial Identity.
2. The Palestinian Monetary Authority shall issue instructions regulating the establishment, management, and supervision of the infrastructure for the Digital Financial Identity.
3. The Palestinian Monetary Authority shall establish the necessary infrastructure to activate and apply the Digital Financial Identity to financial institutions' customers.
4. The Palestinian Monetary Authority shall establish an electronic Know Your Customer register to enable financial institutions to authenticate, identify, and verify the Digital Financial Identity data of customers.
5. The Palestinian Monetary Authority shall issue instructions regulating the establishment, management, and supervision of the infrastructure for the electronic Know Your Customer register.

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 electronic equivalents under prevailing legislation, in terms of binding their parties or their admissibility as evidence.
2. All electronic financial transfers executed in accordance with the legal evidentiary provisions of this Law Decree shall be legally binding against their parties.
3. For the purpose of executing payment transactions, expressions of offer and acceptance shall be made 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 into the payments system shall be final and irrevocable, in accordance with instructions issued by the Palestinian Monetary Authority.

Article 7
Supervisory and Service Provision Authorities

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

Article 8
Licensing

1. No person shall provide any payments services or financial technology services without obtaining a license from the Palestinian Monetary Authority.
2. The Palestinian Monetary Authority shall issue instructions regulating the provision of payments services and financial technology services according to the following:
   a. Licensing conditions and requirements for payments services companies and financial technology companies. b. Activities permitted by electronic means, required application systems, and required security and protection systems, their implementation, and ongoing development.
   c. Conditions and specifications for electronic records, as well as 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 their storage format. f. Conditions required for an electronic document or record to be considered original. g. Obligations arising from any electronic transactions, as well as the timing of transaction execution and settlement, and the obligations of the parties in this regard. h. Conditions and limits for electronic financial transfers and the specified period for such transfers.
   i. Conditions for transferable or negotiable electronic instruments, provided they do not conflict with other laws.
   j. Minimum and maximum limits for fees and commissions charged by payments services companies and financial technology companies for all types of services provided. k. Issuing necessary instructions, standards, and procedures to regulate operations, and issuing any instructions deemed appropriate to achieve the objectives of this Law Decree.
3. For registration with the Ministry of National Economy and to complete the licensing application, any person wishing to provide any payments services, financial technology services, or virtual asset services must obtain prior written approval from the Palestinian Monetary Authority before registering in accordance with instructions issued by the Authority.

Article 9
Electronic Money Guarantee Account

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

Article 10
Supervision and Inspection

1. The Palestinian 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, adequacy of capital, asset quality, effectiveness and risks of operations, management evaluation, service quality, and availability of liquidity to meet operational requirements. b. Evaluating internal control performance and compliance with this Law Decree and instructions issued thereunder.
   c. Verifying the integrity and efficiency of used automated systems, availability of dual control and segregation of duties, adequacy and accuracy of their outputs, and their compliance with business needs and Palestinian Monetary Authority requirements.
   d. Verifying the availability of policies, standards, and operating procedures that ensure operations are conducted properly, 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 Palestinian Monetary Authority's appointed inspectors 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 Palestinian Monetary Authority with necessary financial and statistical data for supervision purposes, as well as audited financial statements, external auditor opinions, and any data and information related to their operations periodically in accordance with instructions issued by the Authority for this purpose.
4. Palestinian 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 if any member is unable or likely to be unable to meet its obligations.
2. The Palestinian Monetary Authority shall issue necessary instructions to regulate collateral and liquidation procedures.

Article 12
Fees and Service Charges
The Palestinian Monetary Authority shall collect the following fees from those subject to this Law Decree:

1. Monthly membership fees in the payments system, capped at (5,000) five thousand US dollars or its equivalent in the legally circulating currency per month.
2. Cheque clearing and transaction settlement fees, capped at (5) five US dollars or its equivalent in the legally circulating currency per cheque or transaction.
3. The Palestinian 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 Palestinian 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 Palestinian Monetary Authority shall issue necessary instructions to implement the provisions of this Article.

Article 13
Companies Register and Virtual Asset Service Providers

1. The Palestinian Monetary Authority shall maintain a central register of all licensed companies and virtual asset service providers.
2. The Palestinian 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 Authority.
3. The Palestinian Monetary Authority may classify companies into categories according to instructions issued by it.

Article 14
Virtual Assets

1. No person or other entity shall trade virtual assets or operate as a virtual asset service provider in the State of Palestine until they are regulated by the Palestinian Monetary Authority based on instructions issued for this purpose.
2. Competent authorities, in coordination with the Palestinian Monetary Authority, shall identify persons trading virtual assets or virtual asset service providers operating 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, and 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 shall not cancel an irrevocable direct debit order except with the payee's consent or by a ruling from a competent court.
4. The member against whom the direct debit is drawn shall not refuse to pay the direct debit order amount if they have sufficient funds.
5. If the member against whom the direct debit is drawn refuses to pay the irrevocable direct debit order amount, they must prove the reason for refusal by a document issued by them specifying the parties to the direct debit, the amount of the irrevocable direct debit order, its submission date, and its due date.
6. A document issued by the member in accordance with paragraph (5) of this Article shall be considered an executive instrument in accordance with the law.
7. The Palestinian Monetary Authority shall issue instructions regulating the implementation of the provisions of this Article.

Article 16
Anti-Money Laundering
Those subject to this Law Decree must comply with the provisions of the prevailing Anti-Money Laundering and Counter-Terrorist Financing Law and the regulations 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 Palestinian Monetary Authority may, upon establishing that a company or virtual asset service provider has violated this Law Decree or instructions issued thereunder, impose any of the following penalties:
   a. Issuing a preliminary warning. b. Issuing a final warning.
   c. Temporarily suspending the provision of a service(s).
   d. Permanently suspending the provision of a 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 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 Law Decree or 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 fifty thousand US dollars or its equivalent in the legally circulating currency, in case of insufficient balances after the end of the business 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 case of insufficient balances at the end of the specified settlement time and before the end of the business day.
4. Anyone who engages in providing payments services, financial technology services, or trading virtual assets without obtaining the approvals and licenses required by this Law 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 providing payments services, financial technology services, or trading 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 Palestinian Monetary Authority shall issue the instructions and decisions necessary to implement the provisions of this Law Decree.

Article 19
Regularization of Status
Persons engaged in providing payments services, financial technology services, or trading virtual assets are granted a period of six months from the date this Law Decree enters into force to regularize their status in accordance with its provisions. This period may be extended once for no more than six months in accordance with a decision by the Palestinian Monetary Authority.

Article 20
Repeal of Conflict

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

Article 21
Entry into Force and Enforcement
All competent authorities shall, each within their respective competence, implement the provisions of this Law Decree. 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 Hamdous Abbas President of the State of Palestine Chairman of the Executive Committee of the Palestine Liberation Organization