Instructions No. 11 of 2022 Regarding the Licensing and Branching of Money Changers

Instructions No. (11) of 2022
Regarding the Licensing and Branching of Money Changers

Based on the provisions of Law Decree No. (40) of 2022 concerning the licensing and regulation of the money changing profession, particularly Articles (3) and (26) thereof, In accordance with the powers delegated to us, And in pursuit of the public interest, We have issued the following Instructions:

Article (1)
Definitions

The words and phrases appearing in these Instructions shall have the meanings specified below, unless the context indicates otherwise:

• Money Changer: A natural or legal person licensed by the Authority to conduct money changing activities.
• Money Changing Company: A legal person licensed by the Authority to conduct money changing activities.
• Person: A natural or legal person.
• Applicant: The person who submits an application to the Authority for a license to conduct money changing activities.
• Head Office: The place of business where some or all money changing activities are conducted, and is considered a legally subordinate part of the Money Changing Company.
• Branch:
• Key Executive: Members of the Board of Directors, Executive Directors, Authorized Signatories, and officials responsible for main and supervisory activities at the Money Changing Company.
• Significant Shareholding: Ownership by a person or group of persons acting together, sharing a common interest, or related up to the second degree, of a direct or indirect percentage equivalent to or exceeding 40% of the shares or stakes of a money changing company, or the voting power therein.

Article (2)
Objective

The provisions of these Instructions aim to regulate the licensing and branching of money changers.

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Article (3)
Licensing of a New Money Changing Company

1. The applicant must submit an application to the Authority for licensing a new money changing company in accordance with Appendix No. (1).
2. The company's founders and key executives must meet the conditions stipulated in Article (7) of these Instructions as applicable.
3. None of the founders shall hold a significant shareholding in another money changing company.
4. Payment of a non-refundable licensing application fee in accordance with the prevailing Instructions.
5. The Authority shall conduct an initial inspection of the proposed premises or request the applicant to provide proof of compliance with related requirements.
6. The Authority shall respond to the applicant within (30) days from the date of receiving the application regarding its completeness, and the response shall specify any deficiencies that must be provided to the Authority to consider the application.
7. Any deficiencies must be completed within (60) days from the date of the response; otherwise, the application shall be deemed void.
8. The Authority shall issue a decision within (30) days from the date of application completeness, either granting preliminary approval or rejecting it, with a reasoned decision in case of rejection.
9. In the event preliminary approval is granted, the Authority shall grant the applicant a maximum period of (6) six months, extendable only once. Approval shall be automatically revoked upon expiration of this period if the following are not completed:
   أ. Actual payment of paid-up capital, which shall not be less than the following minimums:

Legal Form	Paid-up Capital within City Limits	Paid-up Capital outside City Limits
Ordinary Public or Limited Company	250,000 USD	100,000 USD
Private Joint Stock Company	500,000 USD	250,000 USD

ب. Deposit of a cash guarantee with the Authority as follows:

Legal Form	Cash Guarantee within City Limits	Cash Guarantee outside City Limits
Ordinary Public or Limited Company	10,000 USD	5,000 USD
Private Joint Stock Company	25,000 USD	15,000 USD

ت. Deposit of a cash deposit with the Authority as follows:

No.	Legal Form	Deposit Value
1	Ordinary Public or Limited Company	5,000 USD
2	Private Joint Stock Company	10,000 USD

ث. Payment of a lump-sum fee and annual licensing fee in accordance with the prevailing Instructions.
ج. Company registration certificate, memorandum of association, and articles of association according to the company type.
ح. An organizational structure, job descriptions, and clear policies and operational procedures reflecting the efficiency and clarity of internal control, risk management, governance, operational systems, strategy, and policies the company intends to follow, in compliance with prevailing laws and Instructions. خ. Candidates for key positions and their qualification requirements, including appropriate academic qualifications and practical experience. د. Company assets insurance policy. ذ. Lease agreement or property deed for the premises in the company's name. ر. A financial and accounting program qualified by the Authority, including centralized operations and branches, meeting all supervisory requirements of the Authority and anti-money laundering and counter-terrorist financing regulations. ز. Equipping the premises in accordance with Appendix No. (9). س. A final readiness inspection of the premises shall be conducted, or the Authority shall be provided with proof of compliance with related requirements.
10. Final approval shall be granted upon completion of all preliminary approval procedures and requirements.
11. A money changing company that obtains final licensing approval must commence money changing activities within a maximum of (90) days from the date of approval.
12. If the company fails to commence activities within the period specified in paragraph (11), the Authority may extend the period by (30) non-renewable days upon the company's request, stating the reasons preventing commencement.
13. The license issued by the Authority shall be revoked after the period in paragraph (11) expires, unless extended with prior Authority approval.

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Article (4)
Licensing of a New Branch

1. A money changing company wishing to branch out must submit an application to the Authority for prior preliminary approval to license a new branch in accordance with Appendix No. (2), subject to the following:
   أ. The legal form of the branching company outside Palestine must be a Private Joint Stock Company.
   ب. The company's capital must not be less than (1,000,000) one million USD within city limits in Palestine, and (5,000,000) five million USD outside Palestine. ت. None of the shareholders shall hold a significant shareholding in another money changing company. ث. The company must have been licensed for at least two years. ج. No major regulatory violations shall exist for the past two years in accordance with Article (14) of these Instructions. ح. The company must demonstrate the ability to manage operational risks associated with branching, and the efficiency and effectiveness of supervisory controls relative to the size and complexity of financial operations. خ. The company's business results must show net profits for the past two years. د. A company wishing to branch outside Palestine must provide the Authority with approval from the regulatory authority in the host country, considering supervisory capacity and the company's compliance with host country laws and Instructions.
2. The Authority shall conduct an initial inspection of the proposed premises or request proof of compliance.
3. Payment of a non-refundable branching application fee per prevailing Instructions.
4. The Authority shall respond within (30) days regarding completeness, specifying deficiencies.
5. Deficiencies must be completed within (60) days; otherwise, the application is void.
6. The Authority shall issue a decision within (30) days of completeness, either granting preliminary approval or rejecting it with reasons.
7. If preliminary approval is granted, the Authority grants a maximum of (6) six months, extendable only once. Approval is automatically revoked if the following are not completed:
   أ. Provision of a general management for headquarters and branches for companies with more than four branches.
   ب. Existence of (Internal Audit, Compliance) functions to supervise headquarters and branch operations according to the Authority's assessment of branch count, business volume, nature of services, and risks, with appointment of qualified and experienced staff per prevailing Instructions. ت. Payment of a lump-sum fee and annual branching fee per prevailing Instructions. ث. Deposit of a cash guarantee with the Authority as follows:

Legal Form	Cash Guarantee
Ordinary Public or Limited Company	5,000 USD
Private Joint Stock Company	10,000 USD
Limited Liability Company	5,000 USD

ج. Increasing the company's capital by (200,000) two hundred thousand USD above the minimum capital for each new branch within city limits, and by (50,000) fifty thousand USD for each new branch outside city limits. ح. Deposit of a cash deposit with the Authority at 10% of the new company's capital if branching is within Palestine, and 15% if outside. Previously deposited amounts count toward this percentage. خ. Provision of an organizational structure, job descriptions, and clear policies/procedures reflecting internal control, risk management, governance, etc., in compliance with laws. د. Company assets insurance policy. ذ. Lease agreement or property deed for the premises in the company's name. ر. Provision of an Authority-qualified financial/accounting program including centralized operations/branches, meeting supervisory and AML/CFT requirements. ز. Equipping the premises per Appendix No. (9). س. Final readiness inspection or proof of compliance.
8. If all preliminary requirements are met, final approval shall be granted.
9. A money changing company obtaining final branching approval must commence activities at the new branch within a maximum of (30) days from approval.
10. If the company fails to commence within the period in paragraph (9), the Authority may extend by (30) non-renewable days upon request with reasons.
11. Branch licensing approval shall be revoked after the period in paragraph (9) expires, unless extended with prior Authority approval.

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Article (5)
License Renewal

1. Money changers must renew their annual license according to the following procedures:
   أ. Submit a renewal application per Appendix No. (3) by no later than December 31 of each year.
   ب. Payment of the annual fee.
   ت. Renewal of the bank guarantee in favor of the Authority, expiring on January 31 of the year following the license year.
2. Money changers must meet the following conditions when submitting a renewal application:
   أ. Resolution of existing supervisory observations.
   ب. No bounced or unpaid checks in the money changer's account.
   ت. No unpaid financial fines.
   ث. The money changer, partners, shareholders, beneficial owners, or key executives are not listed on prevailing Palestinian blocking and freezing lists.

Article (6)
Ownership Structure and Capital

1. A money changing company wishing to add/remove partners/shareholders or modify their stakes/shareholdings must submit an application to the Authority for prior preliminary approval per Appendix No. (4), subject to:
   أ. Compliance with the minimum capital stipulated in Article (3).
   ب. Compliance with Article (7).
   ت. No partner/shareholder shall hold a significant shareholding in another money changing company within Palestine.
   ث. The partner/shareholder shall not own stakes/shares in a money changing company operating outside Palestine, with a sworn affidavit to this effect. ج. At least (3) three years must have passed since the partner/shareholder acquired stakes/shares in the company. ح. At least (5) five years must have passed since an individual money changer was granted final approval for a single-member Limited Liability Company.
2. If preliminary approval is granted, the company must provide the Authority with the registration and amendment certificate from the Company Registrar within (3) three months, extendable once.
3. A money changer wishing to modify capital must submit an application for prior preliminary approval per Appendix No. (5), subject to minimum capital in Article (3) and Article (7).
4. If preliminary approval is granted, the company must provide the registration/amendment certificate within (3) three months, extendable once.

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Article (7)
Market Entry Criteria

1. A person wishing to establish or invest in a money changing company must provide the Authority with the following information and documents:
   أ. Recent certificate of good conduct.
   ب. Identification of the beneficial owner of the company establishment.
   ت. Declaration of sources and legitimacy of funds intended for establishment, investment, or capital increase.
   ث. Proof of financial solvency for founders and any future partners/shareholders, demonstrating ability to pay minimum capital and increase it as needed. ج. Practical experience certificates demonstrating necessary professional capabilities and competence to manage and succeed a money changing company. ح. If a founder/partner/shareholder is a legal entity, the Authority must be provided with:
2. Recent certificate of registration with the competent authority stating establishment purposes, plus notarized copies of the memorandum and articles of association.
3. Ownership structure, beneficial owner, and approved organizational structure.
4. Audited financial statements for the last year, certified by a licensed statutory auditor.
   خ. Framework and rules for anti-money laundering and counter-terrorist financing.
5. The Authority may interview persons wishing to establish/manage a money changing company or join as partners/shareholders to verify necessary expertise and qualifications.

Article (8)
Relocation

1. A money changer wishing to relocate its head office or any branch must submit an application for prior relocation approval per Appendix No. (6), subject to:
   أ. The relocating money changer's legal form must be a company.
   ب. No major regulatory violations per Article (14).
   ت. At least (3) three years must have passed since licensing.
   ث. Compliance with minimum capital in Article (3).
   ج. At least (2) two years must have passed since final approval for the head office or branch to be relocated, unless the Authority decides otherwise.
2. The Authority shall conduct an initial inspection of the proposed premises or request proof of compliance.
3. If preliminary approval is granted, the company must complete all requirements within (6) six months, extendable once.
4. Compliance with requirements in Appendix No. (9).
5. Final readiness inspection or proof of compliance.

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Article (9)
Change of Legal Form

1. A money changer wishing to change its legal form must submit an application for prior preliminary approval per Appendix No. (7), subject to:
   أ. The new legal form must be a single-member Limited Liability Company only.
   ب. No existing regulatory violations per Article (14).
2. If preliminary approval is granted, the company must comply within (6) six months, extendable once:
   أ. Provide a certified copy of the memorandum/articles of association and registration/amendment certificate from the Company Registrar. ب. Pay full capital and provide supporting documents. ت. Pay the difference in annual and lump-sum fees. ث. Ensure cash guarantees and deposits with the Authority match the new legal form per these Instructions.

Article (10)
Rejection of Applications

The Authority may reject licensing, branching, renewal, cancellation, or approval of new partners/key executives in any of the following cases:

1. Application contains false or misleading information.
2. Submission of tampered or forged documents.
3. Unclear source and legitimacy of funds for establishment or capital increase.
4. Unclear beneficial owner of the license application or discrepancy.
5. Any founder, partner, shareholder, beneficial owner, or key executive is on prevailing Palestinian blocking/freeze lists.
6. Dealing with unlicensed financial institutions or prohibited persons per prevailing state legislation.
7. For public interest preservation.
8. Existence of unpaid bounced checks for founders, shareholders, partners, or key executives.
9. Failure to meet any conditions in Article (4).

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Article (11)
Temporary Closure

1. A money changer must submit an application to the Authority for temporary closure of the head office or branch per Appendix No. (8) if closure exceeds (7) seven days.
2. Maximum temporary closure period is (6) six months, extendable once.
3. Upon approval, premises shall be closed per the approved period.
4. The money changer must resume activities after closure and notify the Authority on the first working day.
5. To extend closure beyond paragraph (2), a new application per Appendix No. (5) must be submitted before (7) seven days prior to expiration.

Article (12)
Permanent Closure

1. A money changer must submit an application per Appendix No. (8) for permanent closure of the head office or branch.
2. Upon approval, the premises must be closed and all money changing-related items, including signage and equipment, removed.
3. Provide the Authority with proof of closure and removal of all money changing-related items.

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Article (13)
Guarantees and Cash Deposits

1. Money changing companies must deposit cash guarantees per these Instructions. The maximum total of bank guarantees, cash deposits, and cash guarantees with the Authority for a money changer (including guarantees for branch licensing and remittance activities) is (50,000) fifty thousand USD.
2. Paragraph (1) excludes the cash deposit or bank guarantee value stipulated in Article (4), paragraph (7/ج).
3. Individual money changers must deposit a cash deposit or provide a bank guarantee in favor of the Authority as follows:

Category	Cash Deposit / Bank Guarantee
Category Two	7% of authorized capital
Category Three	5% of authorized capital

Article (14)
Major Regulatory Violations

For the purpose of applying these Instructions, the following are considered major regulatory violations:

1. Opening accounts, accepting deposits, trusts, or precious metals.
2. Providing direct or indirect loans, facilities, or financing.
3. Speculating on currency and precious metal prices in a manner that could harm financial, monetary stability, or public interest.
4. Repeated use of personal accounts for money changing business.
5. Repeated failure to record and disclose transactions in the qualified accounting system and failure to submit reports on time.
6. Failure to disclose commissions and repeated failure to issue invoices.
7. Non-cooperation with the Authority's inspection team.
8. Failure to rectify existing violations within the timeframe approved by the Authority.
9. Deficiencies in anti-money laundering and counter-terrorist financing procedures and systems.
10. Deficiencies in internal control and supervisory procedures and their ineffectiveness.

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Article (15)
General Provisions

1. No person shall conduct money changing activities in Palestine unless licensed by the Authority.
2. No person wishing to conduct money changing activities shall be licensed except through a company registered per the Law.
3. Registration of a company whose purpose is money changing with the Company Registrar, or any amendments to existing money changing companies, is prohibited without prior preliminary approval from the Authority.
4. The same conditions applicable to ordinary companies apply to single-member Limited Liability Companies regarding "minimum capital, fees, cash guarantees, and deposits".
5. Money changing companies are prohibited from commencing preparation of a new branch without prior preliminary approval from the Authority.
6. Commencement of money changing activities at the head office or branch is prohibited without final Authority approval.
7. Money changers are prohibited from modifying ownership structure/capital, relocating/closing head office/branch, merging with another money changing company, purchasing assets/liabilities of an individual money changer, or changing authorized signatories/powers or legal form without prior Authority approval.
8. Money changing companies are prohibited from amending the memorandum and/or articles of association without prior Authority approval.
9. The Authority shall issue an annual license certificate to the money changer, which must be displayed inside the head office and branch.
10. Final approval shall be granted to the applicant or money changer upon completion of all final approval procedures and requirements.

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Article (16)
Penalties

Any person violating these Instructions shall be penalized per Law Decree No. (40) of 2022 concerning the licensing and regulation of the money changing profession.

Article (17)
Repeal of Conflicting Provisions

1. Instructions No. (2011/01) concerning money changer licensing are repealed.
2. Instructions No. (2011/02) concerning money changer licensing are repealed.
3. Instructions No. (2012/01) concerning minimum capital are repealed.
4. Paragraphs (1/أ/1) and (1/أ/2), as well as Article (2) of Instructions No. (2012/03) concerning working capital and cash guarantees, are repealed.
5. Instructions No. (01) of 2018 concerning annual license renewal for money changers are repealed.
6. All provisions conflicting with these Instructions are repealed.

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Article (18)
Execution and Enforcement

All competent authorities shall execute the provisions of these Instructions according to their respective jurisdictions, effective from the date of issuance. Issued in Ramallah on: 15 / 12 / 2022.

Dr. Firas Malham
Governor
[Signature]

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