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2017-01-01

Circular No. 243 on Dealing with Foreign Exchange Companies

The Palestine Monetary Authority mandates that all domestic banks obtain prior regulatory approval and submit comprehensive due diligence documentation before establishing or maintaining direct or indirect business relationships with foreign exchange companies. Banks processing electronic money transfers through these entities must strictly adhere to a daily transaction limit of US $7,000 per sender or beneficiary, process each transfer individually with full identification data, and ensure the counterparty bank is structured as a corporate entity. All covered transfers remain subject to mandatory reporting obligations under the directives of the National Committee for Combating Money Laundering and Terrorist Financing.

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Palestine Monetary Authority

PALESTINE MONETARY AUTHORITY

Circular No. (2017/243)

To all banks operating in Palestine

Date: Wednesday, 29 November 2017

Subject: Dealing with Foreign Exchange Companies

Based on the provisions of Law Decree No. (20) of 2015 concerning the prevention of money laundering and terrorist financing and its amendments, and in reference to the decision of the National Committee for Combating Money Laundering and Terrorist Financing No. (2017/07) regarding the requirements for dealing with Lari and Al-Fardan exchange companies, which was circulated to banks via Circular No. (2017/163) dated 07/08/2017, the following is required:

  1. All banks operating in Palestine that deal directly or indirectly with foreign exchange companies, or intend to do so, must obtain the approval of the Palestine Monetary Authority to deal or continue dealing with such companies, subject to providing the following information:

    a. Obtain an updated copy of the foreign exchange companies' responses to the questionnaire issued by "Wolfsberg" regarding anti-money laundering procedures.

    b. Obtain a certified true copy of the official licenses issued by the central bank of the foreign exchange company's home country, including approval to open and use accounts with foreign banks for the purpose of conducting international money transfers.

    c. Obtain the operational procedures related to the risk-based approach at all stages, including procedures for classifying financial products and high-risk customers.

    d. Obtain clarification regarding standard and enhanced due diligence procedures, specifically procedures for dealing with politically exposed persons, financial transactions in which the companies act as intermediaries, and dealing with lists issued pursuant to UN Security Council resolutions related to combating terrorist financing.

  2. In addition to the due diligence procedures stipulated in Article (5) of Instructions No. (02) of 2016 concerning the prevention of money laundering and terrorist financing for banks, and circulated via Circular No. (2016/105) dated 15/06/2016, banks wishing to

deal directly or indirectly with foreign exchange companies via electronic money transfers

must comply with the following:

a. The value of electronic transfers for the transfer requester or beneficiary shall not exceed US $7,000 or its equivalent in other currencies per day under any circumstances.

b. Each transfer must be issued or received individually, accompanied by the necessary data in accordance with transfer identification procedures, and dealing with transfers via bulk processing is prohibited.

c. Ensure that the legal form of the bank being dealt with is a company.

d. Comply with the requirements of Article No. (7) regarding electronic transfer identification procedures from Instructions No. (02) of 2016 concerning the prevention of money laundering and terrorist financing for banks, and the requirements of Chapter Nine of the Bank's Anti-Money Laundering and Terrorist Financing Procedures Manual, circulated via Circular No. (2017/78) regarding identification and verification procedures for electronic transfers.

  1. The transfers specified in this circular are subject to reporting obligations in accordance with instructions issued or to be issued specifically by the National Committee for Combating Money Laundering and Terrorist Financing.

Supervision and Inspection Department
Palestine Monetary Authority

Copy: To the esteemed Financial Monitoring Unit

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

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