Decision No. (55) of 2022 Amending Decision No. (132) of 2011 on the Licensing and Supervision of Specialized Lending Institutions

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Official Gazette Office 110 Reference No.: 193-8-2022 No. 193 2022/08/14 Decision No. (55) of 2022 Concerning the Amendment of Decision No. (132) of 2011 on the Licensing and Supervision of Specialized Lending Institutions and Its Amendments

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 Amended Basic Law of 2003 and its amendments, after reviewing Law No. (2) of 1997 concerning the Palestinian Monetary Authority and its amendments, and Law No. (9) of 2010 concerning Banks and its amendments, and Presidential Decision No. (132) of 2011 on the Licensing and Supervision of Specialized Lending Institutions and its amendments, and upon the proposal of the Board of Directors of the Palestinian Monetary Authority dated 2022/06/24, and based on the powers vested in us, and in the public interest, and to achieve, we have decided the following:

Article (1)
Reference to Decision No. (132) of 2011 on the Licensing and Supervision of Specialized Lending Institutions and its amendments, for the purpose of this amendment, shall be to the original system.

Article (2)
Article (1) of the original system is amended as follows:

1. The definition of "Specialized Lending Institutions" is amended to read as follows:
   Specialized Lending Institution: The legal entity licensed to conduct any of the activities specified in Article (11) of this system.
2. Addition of a new definition as follows:
   Branch: The legally subordinate part of a specialized lending institution that conducts any of the activities specified in Article (11) of this system.

Article (3)
Article (4) of the original system is amended to read as follows:

1. Any legal entity wishing to conduct any of the activities specified in Article (11) of this system must submit an application for the required license to the Monetary Authority, and it is prohibited for any person to conduct any of these activities without obtaining a prior license issued by the Monetary Authority.
2. A license to conduct any of the activities specified in Article (11) of this system shall not be granted except to public or private joint-stock companies, whether profit or non-profit, or to foreign companies registered in Palestine in accordance with the law.
3. No new company shall be registered with the Companies Registrar whose purpose is to conduct any of the activities specified in Article (11) of this system except after obtaining prior written approval from the Monetary Authority.

Article (4)
Article (7) of the original system is amended to read as follows:
The Monetary Authority shall issue instructions concerning the opening, closing, transfer, and suspension of operations of a specialized lending institution and its branches.

Article (5)
Article (11) of the original system is amended to read as follows:
A specialized lending institution may conduct any of the following activities in accordance with instructions issued by the Monetary Authority:

1. Lending or financing activities of all types.
2. Retail remittance services in accordance with specific instructions.
3. Payment services as an agent in accordance with specific instructions.
4. Micro-insurance services as an agent after obtaining prior approval.
5. Opening accounts and depositing funds with banks.
6. Borrowing in accordance with specific instructions.
7. Investing in equity after obtaining prior approval.
8. Receiving grants and donations.
9. Any other services permitted by the Monetary Authority.

Article (6)
Article (21) of the original system is amended by adding a new paragraph numbered (5) as follows:
5. Special requirements and conditions for conducting the activities specified in Article (11) of this system.

Article (7)
Article (22) of the original system is amended by adding a new paragraph numbered (13) as follows:
13. Competency and suitability conditions required for market entry, including holding ownership shares and assuming key positions and board membership.

Article (8)
A new article is added to the original system numbered (22) bis as follows:
A specialized lending institution must comply with the following:

1. Legislation related to combating money laundering and terrorist financing, and recommendations and instructions issued by competent authorities in accordance with the law on this matter.
2. Adopt a risk-based approach to ensure the identification, assessment, understanding, monitoring, measurement, and management of risks effectively, taking into account the results of any national risk assessment conducted and risk factors related to its customers, countries or geographic regions, products and services, operations, and service delivery channels. The nature and extent of the risk assessment must be commensurate with the nature and size of operations in financial institutions, and risk classifications must be established in line with the size and complexity of its operations, the expansion of its customer base and products, and the volume of risks it faces.
3. Adopt policies, controls, and procedures consistent with prevailing legislation to manage money laundering and terrorist financing risks, approved by senior management.
4. Take necessary measures to mitigate money laundering and terrorist financing risks and establish operating procedures to identify, assess, and manage money laundering and terrorist financing risks.
5. Conduct risk assessments prior to launching, using, or implementing products, practices, or technological innovations, and take appropriate measures to manage and mitigate emerging risks.
6. Allocate human resources and technical resources commensurate with the money laundering and terrorist financing risk level of the specialized lending institution, and provide continuous training and qualification for personnel for money laundering and terrorist financing prevention purposes.
7. Document its risk assessments in accordance with the provisions of this article, update them, and provide them to the Monetary Authority upon request.

Article (9)
All provisions conflicting with this Decision are repealed.

Article (10)
All competent authorities shall implement the provisions of this Decision according to their respective jurisdictions, and it shall take effect from the date of its publication in the Official Gazette.

Issued in Ramallah on: 2022/08/08 Gregorian
Corresponding to: 10 Muharram 1444 Hijri

Mahmoud Abbas
President of the State of Palestine
Chairman of the Executive Committee of the Palestine Liberation Organization