Circular on Harmonizing the Status of Licensed Money Exchange Companies Under Payment and Electronic Money Transfer Law No. 111 of 2017

In the Name of Allah, the Most Gracious, the Most Merciful

Form (110/1/1)

[Logo of the Central Bank of Jordan]

Reference No.: 3/26/ 13543 Date: 15 Muharram 1439 Corresponding to: September 24, 2018

Circular to Licensed Money Exchange Companies

Subject: Harmonizing the status of money exchange companies in accordance with the provisions of Payment and Electronic Money Transfer Law No. (111) of 2017

Greetings,

In line with the objectives of the Central Bank of Jordan to regulate and develop the national payment system in a manner that ensures the provision of safe and efficient payment, clearing, and settlement systems in the Kingdom, and in accordance with the provisions of Payment and Electronic Money Transfer Law No. (111) of 2017, which entered into force after 120 days from its publication in the Official Gazette dated November 16, 2017, which aims to:

1. Regulate payment and electronic money transfer service activities, including payment, transfer, financial settlements, or clearing electronically, or issuing and managing electronic payment instruments in the Kingdom, by requiring every company engaging in these activities to obtain a necessary license from the Central Bank of Jordan.
2. Enhance the role of the Central Bank of Jordan in supervising and monitoring payment and electronic money transfer service activities; with the goal of strengthening the robustness, efficiency, and effectiveness of payment, clearing, and settlement systems, as well as achieving transparency, efficiency, competitiveness, and protecting financial consumers in the payment sector.

In this context, and seeking to regulate the payment and electronic money transfer service activities stipulated in the aforementioned System for all legal entities engaging in any of these activities, including licensed money exchange companies in the Kingdom, we emphasize to money exchange companies engaging in any of the activities of managing and operating electronic payment systems or any other payment services, including the electronic money transfer activity, as stipulated in the effective Payment and Electronic Money Transfer System, to take harmonization procedures at the Central Bank of Jordan in accordance with the provisions of Article (54) of the aforementioned System, which stipulated that "Subject to the provisions of Articles (47) to (51) of this System, banks, money exchange companies, and any entities conducting payment and electronic money transfer activities shall harmonize their status in accordance with the provisions of this System and the instructions issued pursuant to it, including provisions related to their capital, management, operations, activities, contracts with any third party, and making necessary amendments to their articles of association and bylaws within a period not exceeding one year from the date of entry into force of the provisions of this System, and this period may be extended with the approval of the Board for a period not exceeding one year", and as follows:

First:

1. Paragraph (b) of Article (47) of the effective Payment and Electronic Money Transfer System stipulated that "Money exchange companies engaging in the electronic transfer activity under the license granted to them are considered licensed to conduct this activity under the provisions of the Money Exchange Business Law, provided they meet the requirements stipulated in the System."

2. The provisions of Article (48) of the aforementioned System stipulated as follows: a) Banks and money exchange companies are obliged, within the harmonization period stipulated in this System, to submit to the Central Bank a request attached with all documents demonstrating their compliance with all technical and operational conditions and requirements stipulated in this System or the instructions issued pursuant to it. Any of these companies wishing to conduct any of these activities after the expiration of the harmonization period must obtain the Central Bank's approval after verifying compliance with the technical and operational conditions and requirements stipulated in this System or the instructions issued pursuant to it.

   • http://www.cbj.gov.jo/EchoBusV3.0/SystemAssets/4b130b44-4158-48f1-8163-6056edbdbc50.pdf

   b) Banks and money exchange companies are exempted from this System regarding the conditions and requirements of company type, capital, governance rules, and fitness standards stipulated in this System or the instructions issued pursuant to it. The Central Bank, according to the nature of the business licensed to these companies to conduct and the provisions of their specific legislations, may exempt them from any conditions or requirements stipulated in this System or the instructions issued pursuant to it, or issue for them appropriate provisions under special instructions.

   c) Approvals issued by the Central Bank to banks or money exchange companies to conduct any of the activities stipulated in this System under the legislations organizing their business are considered void if they fail to harmonize their status under the provisions of this System.

3. Article (49) of the same System also stipulated that "Money exchange companies engaging in the electronic money transfer activity under the license granted to them are prohibited from entrusting any third party to perform all or part of the services related to the electronic money transfer activity; unless the third party is a licensed money exchange company to conduct the electronic money transfer activity, or the subject of contracting with the third party is limited to the technical and operational aspects related to this activity."

Second: Activities of managing and operating electronic payment systems or any other payment services other than electronic money transfer. The provisions of Paragraph (a) of Article (50) of the aforementioned System stipulated that "Subject to the provisions of the Central Bank's Money Exchange Business Law, money exchange companies are allowed to conduct any of the other payment services other than electronic money transfer, or manage and operate electronic payment systems, according to any special requirements specified by the Central Bank, provided they submit a license application in accordance with the provisions of this System and meet all the conditions and requirements stipulated therein, except for the requirements of company type, capital, governance rules, and fitness standards." It is also noted that the Payment and Electronic Money Transfer System defined "Electronic Payment System" as follows: "A set of programs or tools prepared for payment, transfer, clearing, or settlement of funds electronically, which are approved by the Central Bank."

Third: Dealing with globally used electronic payment systems The provisions of Paragraph (e) of Article (3) of the Payment and Electronic Money Transfer System stipulated that "The Central Bank may approve any of the globally used electronic payment systems according to the conditions and requirements specified by the Central Bank for this purpose. Entities managing the approved system under this Paragraph are not allowed to deal exclusively with entities licensed by the Central Bank or exempted from the application of the provisions of this System."

It is emphasized that if any money exchange company violates the provisions of the effective Payment and Electronic Money Transfer System or the instructions issued pursuant to it, the Central Bank may impose any administrative penalties or take any measures stipulated in the System or in the legislations organizing their business, in accordance with the provisions of Article (51) of the aforementioned System.

Please accept our highest regards,

[Signature] Dr. Ziad Fraiz