Palestine Monetary Authority

PALESTINE MONETARY AUTHORITY

Instructions No. (1) of 2021

Regarding Electronic Check Clearing

Based on the provisions of Provisional Law No. (17) of 2012 concerning the National Payments Settlement Law, particularly Article (5) thereof, and based on the provisions of Provisional Law No. (15) of 2017 concerning Electronic Transactions, particularly Article (31) thereof, and based on what was approved by the Board of Directors of the Palestine Monetary Authority in its meeting No. (229/4) dated 2021/1/18, and pursuant to the powers delegated to us, and in pursuit of the public interest, we have issued the following Instructions:

Chapter One

General Provisions

Article (1)

Definitions

The words and phrases mentioned in these Instructions shall have the meanings assigned to them below, unless the context indicates otherwise:

Palestine Monetary Authority:	The Palestine Monetary Authority.
Bank:	The bank licensed by the Palestine Monetary Authority.
Member:	The bank participating in the Clearing System.
Beneficiary Member:	The bank submitting the check for collection.
Drawee Member:	The bank issuing the check.
Clearing System:	The electronic check clearing system supervised by the Palestine Monetary Authority.
Electronic Clearing Session:	The process of exchanging information and check images electronically through the Clearing System and determining the financial positions of each member for settlement purposes.
Check:	The check submitted for clearing through the Clearing System.
Net Financial Positions:	The final financial position of the Member resulting from the clearing of accepted checks in the Electronic Clearing Session.
Baraq System:	The Palestine Monetary Authority's electronic real-time gross settlement system.
Security and Technical Specifications:	Physical or technological elements that constitute the check paper according to the Palestine Monetary Authority's instructions.
Electronic Record:	The image of the check and its data entered through the Clearing System by the Member.

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Article (2)

Objective and Scope of Application

1. These Instructions aim to regulate the process of electronic check clearing among Members through the Clearing System.
2. These Instructions apply to all Members in the Clearing System.

Article (3)

Membership in the Clearing System

Membership in the Clearing System is mandatory for all licensed banks.

Article (4)

Permitted Currencies

In addition to the Palestinian currency upon its issuance, the Jordanian Dinar, US Dollar, Israeli Shekel, European Euro, or any other currency permitted by the Palestine Monetary Authority in the future shall be the currencies approved for trading through the Clearing System.

Article (5)

Electronic Record

The Electronic Record shall be relied upon to calculate the net debit and credit financial positions incurred by Members after the conclusion of the Electronic Clearing Session.

Chapter Two

Obligations

Article (6)

Member Obligations

The Member shall comply with the following:

1. Providing the necessary equipment and software to comply with the Clearing System requirements.
2. Preparing and implementing technical and technological inspection plans, procedures, and system updates in accordance with the Palestine Monetary Authority's requirements.
3. Taking all necessary measures and precautions to protect data and information security, and providing an appropriate workforce to ensure the reduction of operational risks.
4. Bearing any costs or obligations arising from its membership in the Clearing System.
5. Monitoring the final financial positions after the conclusion of the Electronic Clearing Session and performing necessary reconciliations.
6. Preparing a list of its Clearing System users and defining their access levels.

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7. Restricting the process of checking checks on the Clearing System to the designated employee.
8. Refraining from submitting checks that have been returned three times through the Clearing System, such that these checks shall be cleared and settled between Members outside the Clearing System.
9. Classifying the check clearing service and its approved systems as critical and essential functions in accordance with these Instructions.
10. Accepting or returning checks drawn on the Member centrally from the General Administration in emergency situations.
11. Notifying the Palestine Monetary Authority in the event of any emergency or if the Member is unable to execute its operations for more than half an hour, and within the agreed timeframe to restore operations.
12. Taking all necessary measures and precautions to ensure continuous access to the Clearing System, and in the event of inability to do so, bearing all consequences arising therefrom.
13. Not submitting a check that lacks the security and technical specifications and has not been authenticated by the Drawee Member with the word ("Seen"), as such checks shall be collected under secondary arrangements between Members outside the Clearing System.

Article (7)

Obligations of the Beneficiary Member

The Beneficiary Member shall comply with the following:

1. The check must be drawn on any of the Member banks and their branches operating in Palestine.
2. The check must be printed and drafted in Arabic and/or English.
3. The check must bear the MICR line according to its approved technical specifications.
4. The original check must not contain any obvious alteration, defacement, or obliteration of its data without the drawer's signature.
5. The check must not be drafted in pencil.
6. Receiving the original check from its client before submitting it for collection through the Clearing System.
7. Verifying the security and technical specifications of the check that are subject to inspection.
8. Providing its client, upon request, with the original check in case of its return, and the calculated record according to Annex No. (1).
9. The check image uploaded to the Clearing System must comply with the conditions stipulated in Annex (2) of these Instructions.
10. Recording all check data in its Electronic Record.
11. The currency of the check drawn must match the currency code indicated in the MICR line.
12. Retaining the original image of checks and their attachments, and their electronic records, in the form they were processed, so that they can be referenced at any time to verify the accuracy of the information contained therein for a period of no less than (15) fifteen years from the date of check submission, without any alteration to them.
13. Retaining the original check for a period of no less than (15) fifteen years from the date of check submission, except in cases where the client or the Drawee Member receives the check.

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14. Providing the Drawee Member with the original check and its electronic record upon a justified written request from the Drawee Member.
15. All checks must be stamped clearly by the Beneficiary Member and placed on the face of the check without obscuring any of the check's essential and mandatory data.

Article (8)

Obligations of the Drawee Member

The Drawee Member shall comply with the following:

1. Verifying the security and technical specifications of the check.
2. Recording all required data related to the returned check in the Electronic Record and verifying its accuracy.
3. Retaining the original image of returned checks and their electronic records in the form they were processed, so that they can be referenced at any time to verify the accuracy of the information contained therein for a period of no less than (15) fifteen years from the date of check submission, without any alteration to them.
4. Providing its client, upon request, with a copy of the original check in case of its return, and the calculated record according to Annex No. (1).
5. Subject to Article (9) paragraph (2) of these Instructions, responding to the check intended for return with a rejection and entering the reason for return; otherwise, the check shall be deemed accepted for settlement.
6. Maintaining sufficient credit balances with the Palestine Monetary Authority to settle obligations arising from the Clearing System.

Chapter Three

Electronic Clearing Session

Article (9)

Clearing System Working Hours

1. The Electronic Clearing Session shall be held once per working day according to Annex No. (3).
2. Check clearing shall be completed within a maximum period of two working days (T+2), according to the working hours of the Clearing System and the Electronic Clearing Session.
3. The Member must not upload any checks to the Clearing System between 13:45 and 14:45 to enable the Clearing System to complete its daily operations properly.
4. Check files entered after the close of business on a working day shall be considered as having the value date of the following working day.
5. The Palestine Monetary Authority may temporarily suspend the operation of the Clearing System or modify its working hours, and may also set a different date for convening the Electronic Clearing Session, cancel it, or hold additional electronic clearing sessions, and banks shall be notified thereof.
6. In the event of an emergency system holiday added to the Clearing System one day prior, checks shall be settled on the second working day following the end of the holiday.

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Article (10)

Return of Checks

The check shall be returned through the Electronic Clearing System as follows:

1. The reason for return must be stipulated among the return reasons listed in Annex No. (4).
2. Priority shall be given in determining the reason for the check's return through the Clearing System to insufficient funds or drawer's account balance.
3. A returned check shall not be resubmitted on the same working day.

Article (11)

Rejection of Checks and Files

1. Files that do not comply with the standards and characteristics supported by the Clearing System shall be automatically rejected according to Annex No. (5).
2. Checks that do not comply with the standards and characteristics supported by the Clearing System shall be automatically rejected according to Annex No. (6).
3. Automatically rejected checks and files shall not be included in the calculation of the Member's net financial positions resulting from its operations in the Clearing System.

Chapter Four

Final Provisions

Article (12)

Final Settlement of Clearing Results through the Baraq System

1. The cash settlement of the net debit and credit financial positions incurred by the Member after the conclusion of the Electronic Clearing Session shall be executed through the Baraq System.
2. In the event that clearing results cannot be settled through the Baraq System before the closing time of the designated settlement window, the execution of result settlement shall be postponed to the morning of the following working day.
3. The Palestine Monetary Authority may use the credit balances available in the Member's accounts to settle its obligations arising from clearing operations with other Members.

Article (13)

Check Collection

The value of checks shall be credited to the client's account subject to collection charges, and shall become immediately withdrawable after the completion of settlement on the Baraq System.

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Article (14)

Merger, Acquisition, and Closure

Checks drawn on banks whose membership in the Clearing System has ended due to merger, acquisition, or closure shall be processed in accordance with instructions issued by the Palestine Monetary Authority at the time.

Article (15)

Repeal

1. Instructions No. (7) of 2018 concerning electronic check clearing and its amendments are hereby repealed.
2. Any provision conflicting with the terms of these Instructions is hereby repealed.

Article (16)

Penalties

Any person who violates the provisions of these Instructions shall be penalized in accordance with the provisions of Provisional Law No. (17) of 2012 concerning the National Payments Settlement Law.

Article (17)

Authorization and Enforcement

All competent authorities shall, each within its respective jurisdiction, implement the provisions of these Instructions, which shall take effect from the date of their issuance.

Issued in Ramallah on 2021/1/19

Dr. Fares Malham
Governor

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Annex No. (1): Computerized Record of Returned Check

Electronic Clearing System - Palestine

Beneficiary Bank Name

Computerized Record of Returned Check

Computerized Record of Return Check

Check Data

Clearing Date	Amount	Check No.	Account No.	Branch No.	Bank No.	Drawee Bank

Return Reasons

Description	Return Reason Code

Check Image

Check Front Image

Check Back Image

This certificate is issued by Bank ... Branch ... dated ... / ... / ... at 00:00 Bank Stamp

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Annex No. (2): Check Image Specifications

The check image specifications on the front and back shall be at a minimum as stated in the table below:

Compression:	JPEG
Grey scale:	256
Resolution:	200 dpi

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Annex No. (3): Operational Working Hours of the Clearing System

1. Classification of Working Days in the Clearing System according to the Check Clearing Cycle:

T+2	T+1	T+0	T-1	T-2
Second Working Day After	Next Working Day	Current Working Day	Previous Working Day	Day Before Previous

2. Daily Operational Working Hours of the Clearing System:

Operations	Event - Window	Time
1. Activating the current new working day value date (T+0) for checks and receiving check files submitted for clearing (Returned + Uploaded previously).<br>2. Processing check files (Submitted for clearing + Returned) and uploaded by banks after 14:05 on the previous working day (T-1), and sending processing result files (QVF Files) and incoming check files (QNF) related thereto, including the settlement date automatically calculated in the Clearing System.	Opening the Clearing System on the current working day (T+0)<br>Start of Day (SOD)	08:15
Executing the check clearing cycle for checks submitted for clearing on the Clearing System before the previous two working days (T-2), and the issuing bank cannot return the check after this time.	End of check return operations { Checks uploaded before two working days (T-2) }	09:30
1. Automatically feeding the electronic clearing session and cash settlement for only accepted (Accepted) checks submitted for clearing before two working days (T-2).<br>2. Calculating the net debit or credit financial positions incurred by the bank.<br>3. Feeding the cash settlement of net financial position results to the "Baraq" system.<br>4. Sending financial settlement result files (RSF Files).<br>5. Extracting reports on net financial positions and performing internal reconciliations.	Convening the clearing and cash settlement session { Only accepted checks uploaded before two working days (T-2) }	09:30 - 10:30
PMA Instructions: The check submission process ends with the value date of the current day (T+0), thereby all banks are obligated to stop submitting checks for the value date of the current day (T+0).	End of check submission for clearing for the current working day (T+0)	13:45
System operations: 1. Receipt and processing of checks shall cease at 14:00 for those settled by value date (T+0), and checks (any check) (T+2) with value date shall be processed directly between 14:00 and 14:05, and processing result files (QVF Files) and incoming check files (QNF Files) with settlement date (T+3) shall be sent.	Clearing System stops accepting checks submitted for clearing with value date of the current working day (T+0)<br>{ System Cheques Processing Cut-off }	14:00
1. Receiving checks uploaded after 14:05 in (Received) status, and no processing will be done for them until the Clearing System opens on the next working day (T+1).<br>2. Completion of all system operations and closing the Clearing System with the value date for the current working day (T+0).	Closing the Clearing System on the current working day (T+0)<br>(EOD) End of Day	14:30