Palestine Monetary Authority

PALESTINE MONETARY AUTHORITY

Circular No. (15/2019)

To all banks operating in Palestine

Date: Sunday, January 13, 2019

Subject: Instructions on Politically Exposed Persons

Attached are the instructions of the Honorable National Committee for Combating Money Laundering and Terrorist Financing No. (1) for the year 2018, published in Official Gazette No. (149) regarding "Politically Exposed Persons", and therefore; we emphasize the necessity of full compliance with the provisions of the aforementioned instructions and the requirements of Circular No. (208/209) issued on 19/09/2018, to be provided to us within a maximum of one week from its date, confirming the following:

1. The extent of providing approved policies and work procedures regarding enhancing identification and verification procedures for these individuals and their sources of wealth and funds, and conducting enhanced and strengthened due diligence on financial transactions executed on their behalf.
2. Preparing the banking system and anti-money laundering and counter-terrorist financing systems to enable meeting the requirements specified in our aforementioned circular.

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Supervision and Inspection Department
Palestine Monetary Authority

Attachment: Instructions on Politically Exposed Persons.
Copy: Honorable Financial Intelligence 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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Official Gazette

Issue No. (149) 28/11/2018

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 Legislative Decree No. (20) for the year 2015 regarding 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 in 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 specified below, unless the context indicates otherwise:
   • The Law: Legislative Decree No. (20) for the year 2015 regarding 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 Article (19) of the Law.
   • The Unit: The Financial Intelligence Unit, established pursuant to 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 business is related to any of the activities outlined in Table No. (1) attached to the Law, whether practiced for their own benefit or for the benefit of their family.
   • Specified Non-Financial Businesses and Professions: The businesses and professions listed in Table No. (2) attached to the Law.
   • Client: The natural or legal person who has a business relationship with any financial institution or any of the specified non-financial businesses and professions.
   • Politically Exposed Person (PEP): The person, their family members, and close associates, who holds or has held, whether in Palestine or abroad, a prominent public political position or senior function, which includes, but is not limited to, the categories stipulated in Article (3) of these instructions.
   • Trust: A legal relationship under which assets are placed under the control of the settlor for the benefit of a beneficiary or for a specific purpose, and those assets form funds independent of the settlor's property, with the right to the settlor's assets remaining in the name of the settlor or 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.

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Article (2) Scope of Application

The provisions of these instructions shall apply to financial institutions and specified 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.

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Article (3) Categories of Politically Exposed Persons

The categories of politically exposed persons shall be classified as follows:

1. Prominent public political positions or senior functions, which include, for example, the following:

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

2. Presidents, vice presidents, and directors of charitable institutions or local and foreign non-governmental organizations, and members of boards of directors.

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

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Article (4) Risk-Based Approach

Financial institutions and specified non-financial businesses and professions shall identify, understand, and assess risks, and apply a risk-based approach in due diligence procedures with politically exposed clients as stipulated in Article (6) of the Law, and establish the necessary policies, strategies, and measures for this purpose.

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Article (5) Enhanced Due Diligence

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

1. Establishing appropriate risk management systems and policies to determine whether the client or beneficial owner is a politically exposed person, whether domestic or foreign, including their family members and close associates.
2. Obtaining senior management approval before establishing 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 whether it is consistent with financial activity, exercising special care in their transactions and operations conducted with any of them, and the purpose of those operations, and recording the results in special records.

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Article (6) Insurance Policy Risks

Financial institutions and specified non-financial businesses and professions shall establish and take necessary measures to determine whether a politically exposed person is a beneficial owner of a life insurance policy, and if so, they shall do the following:

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

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Article (7) Repeal

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

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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.

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Issued in the city of Ramallah on: 1/11/2018 AD
Date: 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 No. (209/2018)

Wednesday, September 19, 2018

To all banks operating in Palestine

Subject: Politically Exposed Persons (PEPs)

With the Palestine Monetary Authority's commitment to enhancing the anti-money laundering and counter-terrorist financing environment in Palestine in accordance with the provisions of Legislative Decree No. (20) for the year 2015 regarding "Combating Money Laundering and Terrorist Financing" and the instructions issued by the National Committee pursuant thereto, and in alignment with international standards and practices related to Politically Exposed Persons, we emphasize the following:

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

2. Providing us with confirmation of the bank's implementation of the following:

   a. The extent of providing approved policies and work procedures regarding enhancing identification and verification procedures for these individuals and their sources of wealth and funds, and conducting enhanced and strengthened due diligence on financial transactions executed on their behalf.

   b. The extent of preparing the banking system and anti-money laundering and counter-terrorist financing systems at the bank to enable:

   • Determining the risk level of individuals and classifying them under the category of "Politically Exposed Clients and their close associates", along with providing us with the names of clients classified under this category.
   • Issuing alerts when financial transactions are executed on behalf of these individuals.

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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

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Providing us 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 to us starting from the end of the third quarter of the current year and quarterly thereafter, according to the data specified in the attached report, with the list to be sent no later than the fifth working day from the end of each quarter to the following email address of the Anti-Money Laundering and Counter-Terrorist Financing 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 us with an action plan to rectify the situation no later than the end of the current year.

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Supervision and Inspection Department
Palestine Monetary Authority

Attachment: Report on 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

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Note: All banks are requested to send a copy of this circular to the bank's internal audit office, and send a copy to the Anti-Money Laundering and Counter-Terrorist Financing Unit at the Palestine Monetary Authority.

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Table: Report on Politically Exposed Persons and their close associates

No.	Client Name	Nationality	ID/Commercial Registration No.	Account Type	Currency Type	Account No.	Relationship Type with Client	Account Opening Date	Notes

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