Palestine Monetary Authority

PALESTINE MONETARY AUTHORITY

Instructions No. (5) for the Year 2021

Regarding the Regulation of the Relationship Between Payment Service Companies and Agents

Based on the provisions of Decision-Law No. (17) for the Year 2012 regarding the National Payments Settlement Law, particularly Articles (5) and (9) thereof, and based on what the Board of Directors of the Palestine Monetary Authority approved in its meeting No. (236) dated 23/06/2021, and in pursuit of the public interest, we have issued the following Instructions:

Chapter One

Definitions and Scope of Application

Article (1)

Definitions

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

• Authority: The Palestine Monetary Authority.
• Service Provider: A company licensed by the Authority to provide payment services.
• Person: A natural or legal person.
• User: A person who uses payment services as a payer or payee.
• Principal Agent: A person entrusted to act on behalf of the Service Provider in providing all or some of the services the Service Provider is licensed to provide, according to their agreement.
• Sub-Agent: A person entrusted to act on behalf of the Principal Agent in providing all or some of the services the Principal Agent is permitted to provide, according to their agreement.
• Merchant: A person entrusted to act on behalf of the Service Provider in funding the electronic wallet accounts of Users, according to their agreement.

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Article (2)

Objective and Scope of Application

1. These Instructions aim to regulate the operations of payment providers through agents in Palestine in a secure and transparent manner.
2. The provisions of these Instructions shall apply to all companies licensed by the Authority to provide payment services.

Chapter Two

Principal Agent of the Payment Service Provider

Article (3)

Contracting with the Principal Agent

The Service Provider must adhere to the following when contracting with a Principal Agent:

1. Obtain the prior written approval of the Authority for the approved contract template with the Principal Agent and its amendments.
2. Sign a specific agreement clarifying the terms and conditions of the contract and the responsibilities of all parties.
3. Include the following in the agreement:
   • a. The Authority's right to supervise and inspect the Principal Agent's operations related to payment services at any time, except for entities licensed by the Authority.
   • b. The Principal Agent may act as an agent for more than one payment service provider.
4. Monitor and oversee all transactions related to the services provided by the Principal Agent and the associated financial settlements.
5. Retain all documents related to account opening and maintain the confidentiality of this information and data, whether in its possession or the Principal Agent's, and not disclose them except in accordance with the law.
6. Obtain a valid certificate of no criminal record for the Principal Agent, except for entities licensed by the Authority and legal persons.
7. The Principal Agent must be registered with the competent legal authorities.
8. The Principal Agent must not be listed on the blocking lists issued by competent authorities.
9. The Principal Agent must not have been declared bankrupt or unable to pay debts, unless reinstated.
10. The Principal Agent must not have been convicted by a competent court of a final judgment for crimes of theft, fraud, embezzlement, forgery, defamation, perversion, bad credit, crimes involving honor, trust, or public morals, or any money laundering crimes.
11. Provide sufficient knowledge and training to the Principal Agent to perform the assigned tasks, including:

• a. Procedures for handling services provided through it and sufficient knowledge of the associated systems.
• b. Due diligence procedures and requirements for combating money laundering and terrorist financing.
• c. Document retention and documentation procedures.
• d. Procedures for receiving and registering complaints from Users.

12. Without prejudice to the rights of the User, the relationship between the Service Provider and the Principal Agent shall automatically terminate in case of violation of the provisions of these Instructions.

Article (4)

Provision of Services through the Principal Agent

A Service Provider wishing to provide any of its services through a Principal Agent must adhere to the following:

1. Continuously supervise and monitor the Principal Agent's compliance with anti-money laundering and counter-terrorist financing requirements.
2. Maintain an updated list of approved Principal Agents, their addresses, and the services provided through them, and publish it through appropriate means, including at least the website.
3. Require the Principal Agent to clearly announce to the public proof that it is an approved agent of the Service Provider and to display the services provided through it.
4. Immediately notify the Authority in case the Principal Agent violates the Authority's instructions regarding payment services.

Article (5)

Sub-Agents

The Principal Agent may contract with sub-agents for the purpose of providing payment services, subject to the following:

1. Obtain the prior written approval of the Authority for the agreement template between the Principal Agent and the Sub-Agent.
2. The agreement between the Principal Agent and the Sub-Agent must include the Sub-Agent's acceptance of the Authority's right to supervise and inspect the Sub-Agent's operations related to payment services at any time.
3. The Sub-Agent's work shall be limited to withdrawal and funding services for Users only.
4. The funding limit through the Sub-Agent shall not exceed $2,000 per month per User or its equivalent in other circulating currencies.
5. The cash withdrawal limit through the Sub-Agent shall not exceed $500 per month per User or its equivalent in other circulating currencies.
6. The transfer of electronic balances between the Principal Agent and its affiliated Sub-Agents is permitted only according to the agreement signed between the parties.
7. The Service Provider is responsible for carrying out due diligence, verification, and Know Your Customer (KYC) procedures for all Principal Agents and Sub-Agents.
8. The Service Provider remains responsible for ensuring that all Principal Agents and Sub-Agents comply with applicable laws and instructions.
9. A Sub-Agent may act as a sub-agent for more than one Principal Agent.

Article (6)

Liquidity Management

The Service Provider is responsible for monitoring and supervising the cash liquidity and electronic balances held by Principal Agents and Sub-Agents, by preparing and adopting an internal policy for the Service Provider that ensures the provision of necessary balances to deliver payment services, subject to obtaining the prior written approval of the Authority.

Article (7)

Funding User Accounts through Merchants

The Service Provider may contract with a merchant for the purpose of funding User accounts, subject to the following:

1. Obtain the prior written approval of the Authority for the merchant handling policy and the contract template with them.
   • b. The merchant must be registered with the competent legal authorities.
   • c. The merchant must not be listed on the blocking lists issued by competent authorities.
   • d. Take all due diligence procedures and Know Your Customer procedures for the merchant.
   • e. The funding limit through the merchant shall not exceed $300 per month per User or its equivalent in other circulating currencies.
2. Opening accounts for new Users through merchants is prohibited, and funding operations shall be limited to existing Users only.
3. The Service Provider bears responsibility for all transactions executed through merchants and their supervision.

Article (8)

Repeal

1. Instructions No. (4) for the Year 2020 regarding the regulation of the relationship between payment service companies and agents are hereby repealed.
2. Anything inconsistent with the provisions of these Instructions is hereby repealed.

Article (9)

Implementation and Enforcement

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

Issued in the city of Ramallah on 30/06/2021 AD

Dr. Firas Malham
Governor
[Signature]