Law Decree No. 41 of 2022 Concerning National Payments

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Official Gazette Office 66 Reference No: 193-8-2022 Issue No. 193 2022/08/14 Law Decree No. (41) of the Year 2022 Concerning National Payments

President of the State of Palestine
President of the Executive Committee of the Palestine Liberation Organization

Based on the Basic Statute of the Palestine Liberation Organization, and the Basic Law amended in the year 2003 and its amendments, and after reviewing Law No. (2) of the year 1997 concerning the Palestinian Monetary Authority and its amendments, and Law No. (4) of the year 2001 concerning Evidence in Civil and Commercial Matters and its amendments, and Law Decree No. (9) of the year 2010 concerning Banks and its amendments, and Law Decree No. (15) of the year 2017 concerning Electronic Transactions, and upon the proposal of the Council of Ministers dated 2021/12/13, and based on the powers vested in us, and in the interest of the public, and to achieve we have issued the following Law Decree:

Article (1)
Definitions
For the purposes of applying the provisions of this Law Decree, the following words and expressions shall have the meanings assigned to them below, unless the context indicates otherwise:

Authority: The Palestinian Monetary Authority.
Payment System: A set of instruments, procedures, and rules for transferring funds between members or among them. The system includes the members and the operator.
Operator: The Authority or a person licensed by the Authority to operate the Payment System.
Electronic Signature: Electronic data used by a person to sign, and which is logically attached to or associated with other electronic data.
Digital Financial Identity: A set of tools and procedures used to identify a specific individual, collecting electronic attributes and characteristics for the purpose of utilizing financial services in accordance with the provisions of this Law Decree and the legislation in force in Palestine. Authentication: Procedures that enable the verification of the user's identity. Electronic Financial Transfer: An order to transfer funds or securities that is carried out or executed wholly or partially by electronic means. Collateral: Assets provided by a member to ensure the provision of sufficient liquidity to meet its obligations in the Payment System.

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Official Gazette Office 67 Reference No: 193-8-2022 Issue No. 193 2022/08/14 Financial Instrument: All financial instruments issued by the Authority or issued by the Authority on behalf of the Palestinian Government, including treasury bills, debt instruments, certificates of deposit, bonds, and any other financial instruments. Electronic Document: Any content stored electronically, whether it is a written, audio, visual, or audible recording. Electronic Record: A set of information that collectively constitutes a description of a legal or natural person, or relates to payment services, which is created, sent, received, or stored by electronic means. Payment Services: Services defined by the Authority related to sending, receiving, and executing payment orders in circulating currencies, including the issuance and management of payment instruments and the operation of payment systems. Payment Order: Instructions issued by a payer or payee to a member or company to execute a payment transaction in any circulating currency for the purpose of transferring or withdrawing funds, regardless of any obligations between the payer and the payee. Payment Instrument: A dedicated device or devices, also including a set of agreed procedures for use to execute a payment transaction. Irrevocability: A payment order or transfer issued by the user that cannot be revoked or cancelled. Net Financial Positions: The net payment obligations or the net value of settlement obligations on a member in the Payment System. Payment Services Company: A company registered in accordance with the law and licensed to provide payment services. Fintech Company: A company registered in accordance with the law and licensed to provide fintech services. Company: A payment services company or a fintech company. Electronic Know Your Customer (e-KYC) Record: The central "Know Your Customer" database supervised by the Authority to facilitate customer inquiry processes and apply due diligence obligations by financial institutions electronically. Electronic Money: Electronic stored monetary value that constitutes a liability of the issuer, issued against funds for the purpose of executing a payment order between users of payment services. Electronic Money Guarantee Account: The company's account opened with any licensed bank to match the outstanding balance of electronic money issued by the company in accordance with the conditions specified by the Authority. Person: A natural or legal person. User: A person who uses payment services and fintech services as a payer or payee. Member: A legal person licensed to exchange drafts, clear, and settle directly or indirectly in accordance with the instruments, procedures, and rules of the Payment System. Virtual Assets: A digital representation of value or rights that can be traded, transferred, or stored electronically, and can be used for payment or investment purposes. Virtual assets do not include the digital representation of official currencies,
securities, and other financial assets.

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Official Gazette Office 68 Reference No: 193-8-2022 Issue No. 193 2022/08/14 Virtual Asset Service Provider: A person who performs one or more of the activities or operations related to virtual assets, including transferring, exchanging, managing, or storing them, on behalf of or for the benefit of any other person. Direct Debit: An agreement under which the payer grants the payee the right to issue instructions to the member to execute one or more direct debit orders on the payer's account for the benefit of the payee, specifying the value and due date of each installment. Direct Debit Order: A payment order involving a debit from the payer's account for the benefit of the payee based on their request in accordance with the instructions in the Direct Debit Mandate.

Article (2)
Scope of Application
The provisions of this Law Decree shall apply to:

1. The Payment System, the Operator, payment services companies, fintech companies, and virtual asset service providers.
2. All non-cash payment orders and transactions that the parties agree to execute by electronic means.
3. All electronic financial transfers, electronic records, electronic signatures, and any transfers or settlements carried out using payment instruments for the purpose of executing payment services.
4. Electronic clearing of checks and financial instruments.

Article (3)
Purpose of the Law Decree
This Law Decree aims to:

1. Regulate and facilitate the use of electronic means in conducting financial transactions, while observing the provisions of any other laws.
2. Regulate and facilitate the use of new types of payment services in light of the development of financial technology.
3. Regulate and facilitate electronic correspondence via reliable electronic records.
4. Regulate and facilitate e-commerce and other electronic transactions and enhance the development of the legal and commercial infrastructure to implement e-commerce securely.
5. Regulate and facilitate the use of electronic authentication and electronic documents related to payments and fund transfers.
6. Reduce instances of forgery of electronic correspondence and subsequent alterations to such correspondence, and opportunities for fraud in e-commerce and other electronic transactions.
7. Establish uniform principles for rules, regulations, and standards related to the authentication and integrity of electronic correspondence and transactions.
8. Enhance public trust in the integrity and validity of electronic transactions, correspondence, and records.
9. Enhance the development of e-commerce and other transactions at the local and global levels by using electronic signatures.

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Article (4)
Electronic Signature for Financial Institutions

1. The validity of an electronic signature shall be recognized if it can be verified according to authentication procedures stipulated in the legislation in force, and in all cases, it must meet the following conditions:
   a. It must be unique to the signatory and identify them. b. It must be created by means under the sole control of the signatory.
   c. It must ensure a link to the document to which it relates in a manner that reveals any subsequent alteration made to it.
2. The Authority shall issue instructions regulating the form and mechanisms for applying the electronic signature for financial institutions.

Article (5)
Digital Financial Identity and Electronic Know Your Customer (e-KYC) Record

1. The Authority shall issue instructions regulating the issuance, protection, use, handling, and information exchange of the Digital Financial Identity.
2. The Authority shall issue instructions regulating the creation and management of the infrastructure for the Digital Financial Identity and its supervision.
3. The Authority shall create the necessary infrastructure to activate and apply the Digital Financial Identity to customers of financial institutions.
4. The Authority shall create an electronic Know Your Customer (e-KYC) record to enable financial institutions to authenticate, identify, and verify the Digital Financial Identity data of clients.
5. The Authority shall issue instructions regulating the creation and management of the infrastructure for the electronic Know Your Customer (e-KYC) record and its supervision.

Article (6)
Net Financial Positions and Finality of Payments

1. The electronic record, electronic contract, electronic message, electronic transaction, and electronic signature shall produce the same legal effects as written documents and handwritten signatures under the provisions of the legislation in force, in terms of binding the parties or their admissibility as evidence.
2. All electronic financial transfers carried out in accordance with the provisions of this Law Decree shall have legal evidentiary value against the parties.
3. For the purpose of executing payment transactions, the expression of offer and acceptance shall be in the manner agreed upon between the member or company and the user, including electronic means.
4. Net financial positions shall be binding on all.
5. Payment orders received by the Payment System shall be final and irrevocable, in accordance with instructions issued by the Authority.

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Article (7)
Supervisory Powers and Service Provision

1. The Authority is exclusively authorized to supervise payment systems in accordance with the instructions issued for this purpose.
2. The Authority is exclusively authorized to provide payment settlement, clearing, and securities payment settlement services related to members. To achieve this, it may create, operate, or participate in the ownership of any payment system.
3. The Authority is exclusively authorized to supervise payment services companies, fintech companies, and virtual asset service providers in accordance with the instructions issued by it for this purpose.
4. Electronic records held by the Authority or any legally authorized entity to prove the ownership and pledge of securities shall be relied upon. The Authority shall issue the necessary instructions for the management of collateral that can be used and accepted as collateral for settlement and procedures for its liquidation.
5. The Authority may take mandatory measures against any of the entities under its supervision in its capacity as the supervisor of clearing and settlement systems, and take corrective and punitive measures required by law against any person.

Article (8)
Licensing

1. It is prohibited for any person to provide any payment services or fintech services without obtaining a license from the Authority.
2. The Authority shall issue instructions regulating the provision of payment services and fintech services according to the following:
   a. Licensing conditions and requirements for payment services companies and fintech companies. b. Activities permitted to be conducted by electronic means, and the operational systems, security and protection systems, and procedures required to be implemented, monitored, and developed.
   c. Conditions and specifications of the electronic record, as well as the conditions of the electronic contract, message, and transaction.
   d. Rights and obligations of each party to any electronic transaction. e. Mechanisms, conditions, and duration for retaining electronic documents, records, or information, and the form of their storage. f. Conditions required for a document or electronic record to be considered original. g. Obligations arising from any electronic transactions, as well as the time of execution and settlement of transactions, and the obligations of the parties in this regard. h. Conditions and limits for electronic financial transfers and the period specified for them.
   i. Conditions for transferable or negotiable electronic instruments, provided they do not conflict with the provisions of other laws.
   j. Minimum and maximum limits for fees and commissions charged by payment services companies and fintech companies for all types of services provided. k. Issuing instructions, standards, and procedures necessary to regulate the work performed, and issuing any instructions deemed appropriate to achieve the objectives of this Law Decree.

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3. For the purpose of registration with the Ministry of National Economy and completing the licensing application, any person wishing to provide any payment services, fintech services, or virtual asset services must obtain the prior written approval of the Authority before registering in accordance with the instructions issued by the Authority.

Article (9)
Electronic Money Guarantee Account

1. The company must deposit all funds received in exchange for electronic money into an Electronic Money Guarantee Account at a bank in Palestine in accordance with the instructions issued by the Authority.
2. The Electronic Money Guarantee Account is considered independent of the company's financial accounts and constitutes a guarantee for the rights of users of electronic money issued by the company.
3. Execution shall not be taken against the Electronic Money Guarantee Account for any debts, dues, or rights accrued to the company, except for debts and dues specific to users of electronic money.
4. The Electronic Money Guarantee Account is exempt from procedures for dissolution, bankruptcy, or liquidation of the company or bank as stipulated by law.
5. The Authority shall issue instructions determining the conditions and terms specific to the Electronic Money Guarantee Account.

Article (10)
Supervision and Inspection

1. The Authority may appoint one or more inspectors to inspect companies and virtual asset service providers at any time to examine books, records, automated systems, and financial data. The inspection shall include any of the following:
   a. Verifying the integrity of the financial position, adequacy of capital, quality of assets, effectiveness and risks of operations, management evaluation, service quality, and availability of liquidity to meet operational requirements. b. Evaluating the performance of internal control and compliance with the provisions of this Law Decree and the instructions issued thereunder.
   c. Verifying the integrity and efficiency of the automated systems used, the availability of dual control and segregation of duties, and the adequacy and accuracy of their outputs and their fulfillment of work needs and Authority requirements.
   d. Verifying the availability of policies, standards, and work procedures that ensure the proper execution of work, compliance with them, and their updating to keep pace with developments in the work environment.
2. The company and virtual asset service provider must provide the inspectors appointed by the Authority with all books, records, accounts, documents, and any other requirements necessary to complete the inspection process.
3. The company and virtual asset service provider must provide the Authority with the necessary financial and statistical data for supervision purposes, as well as audited financial statements, the external auditor's opinion, and any data and information related to their work periodically in accordance with instructions issued by the Authority for this purpose.
4. Employees of the Authority appointed for supervision and inspection shall have the status of judicial police officers within their jurisdiction.

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Article (11)
Collateral

1. The Operator may liquidate collateral and take appropriate measures in the event that any member is unable to meet its obligations or is likely to be unable to do so.
2. The Authority shall issue the necessary instructions to regulate collateral and liquidation procedures.

Article (12)
Fees and Service Charges
The Authority shall collect the following fees from those subject to the provisions of this Law Decree:

1. Monthly membership fees in the Payment System, up to a maximum of (5,000) five thousand US dollars or its equivalent in the legally circulating currency for each month.
2. Check clearing and draft settlement fees, up to a maximum of (5) five US dollars or its equivalent in the legally circulating currency for each check or draft.
3. The Authority shall collect the following fees from the Company:
   a. Non-refundable license application fee of (1,000) one thousand US dollars or its equivalent in the legally circulating currency. b. One-time license fee of (20,000) twenty thousand US dollars or its equivalent in the legally circulating currency.
   c. Annual license fee of (5,000) five thousand US dollars or its equivalent in the legally circulating currency.
4. The Authority shall collect the following fees from the virtual asset service provider:
   a. Non-refundable license application fee of (5,000) five thousand US dollars or its equivalent in the legally circulating currency. b. One-time license fee of (20,000) twenty thousand US dollars or its equivalent in the legally circulating currency.
   c. Annual license fee of (10,000) ten thousand US dollars or its equivalent in the legally circulating currency.
5. The Authority shall issue the necessary instructions to implement the provisions of this Article.

Article (13)
Company Register and Virtual Asset Service Providers

1. The Authority shall maintain a central register of all licensed companies and virtual asset service providers.
2. The Authority shall publish on its website and any other advertising medium it deems appropriate a list of names of companies and virtual asset service providers licensed by the Authority.
3. The Authority may classify companies into categories in accordance with instructions issued by it.

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Article (14)
Virtual Assets

1. It is prohibited for any person or any other entity to trade virtual assets or work as a virtual asset service provider in the State of Palestine until they are regulated by the Authority based on instructions issued for this purpose.
2. The competent authorities, in coordination with the Authority, shall determine the persons dealing with virtual assets or virtual asset service providers without a license and refer them to the Public Prosecution.

Article (15)
Direct Debit

1. Any person may issue a direct debit for future installments, and the direct debit order may be either revocable or irrevocable.
2. The payer may cancel a revocable direct debit order at any time.
3. The payer is prohibited from cancelling an irrevocable direct debit order except with the consent of the payee or by a decision issued by a competent court.
4. The member from whom the debit is made is prohibited from refusing to pay the value of the direct debit order if they have sufficient funds.
5. If the member from whom the debit is made refuses to pay the value of an irrevocable direct debit order, they must prove the reason for refusal to pay by a document issued by them containing the parties to the direct debit, the value of the irrevocable direct debit order, the date of its submission, and its due date.
6. The document issued by the member in accordance with the provisions of paragraph (5) of this Article shall be considered an executive document in accordance with the provisions of the law.
7. The Authority shall issue instructions regulating the implementation of the provisions of this Article.

Article (16)
Combating Money Laundering
Those subject to the provisions of this Law Decree must comply with the provisions of the law combating money laundering and terrorist financing in force and the systems and instructions issued thereunder.

Article (17)
Violations and Penalties

1. The member must provide sufficient balances in its accounts to settle clearing results and cover net financial positions.
2. The Authority may, in the event that a company or virtual asset service provider is found to have violated the provisions of this Law Decree and the instructions issued thereunder, impose any of the following penalties:
   a. Issuing a preliminary warning. b. Issuing a final warning.
   c. Temporarily suspending the provision of service(s).
   d. Permanently suspending the provision of service(s). e. Imposing a financial fine on the company or virtual asset service provider not less than (3,000) three thousand US dollars and not exceeding (250,000) two hundred and fifty thousand US dollars or its equivalent in the legally circulating currencies. f. Revoking the license granted to the company or virtual asset service provider.
3. Anyone who violates the provisions of this Law Decree and the instructions issued thereunder shall be punished as follows:
   a. By a fine not less than (5,000) five thousand US dollars and not exceeding (250,000) two hundred and fifty thousand US dollars or its equivalent in the legally circulating currency in the event of insufficient balances after the end of the working day. b. By a fine not less than (50) fifty US dollars and not exceeding (20,000) twenty thousand US dollars or its equivalent in the legally circulating currency in the event of insufficient balances at the end of the specified settlement time and before the end of the working day.

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4. Anyone who engages in the activity of providing payment services, fintech services, or dealing with virtual assets without obtaining the approvals and licenses required by the provisions of this Law Decree and the instructions issued thereunder shall be punished by imprisonment for a period not less than two weeks and not exceeding two years, or by a financial fine not less than (2,000) two thousand US dollars and not exceeding (50,000) fifty thousand US dollars or its equivalent in the legally circulating currency, or by both penalties.
5. Anyone who engages in payment services, fintech services, or dealing with virtual assets without obtaining licenses shall be referred to the Attorney General to take legal action.

Article (18)
Issuance of Instructions and Decisions
The Board of Directors of the Authority shall issue the instructions and decisions necessary to implement the provisions of this Law Decree.

Article (19)
Rectification of Status
Persons engaged in the business of providing payment services, fintech services, and virtual asset services are granted a period of six months from the date of entry into force of this Law Decree to rectify their status in accordance with its provisions, which may be extended once for a period not exceeding six months in accordance with a decision by the Authority.

Article (20)
Repeal of Conflicting Provisions

1. Law Decree No. (17) of the year 2012 concerning the National Payment Settlement Law is repealed.
2. All systems, instructions, decisions, and guidelines issued by the Authority shall remain in force to the extent that they do not conflict with the provisions of this Law Decree until they are repealed and systems, instructions, and guidelines are issued in accordance with the provisions of this Law Decree.
3. Everything that conflicts with the provisions of this Law Decree is repealed.

Article (21)
Entry into Force
All competent authorities shall, each within their respective jurisdiction, implement the provisions of this Law Decree, and it shall come into force from the date of its publication in the Official Gazette.

Issued in Ramallah on: 2022/08/08 Gregorian
Corresponding to: 1/10/1444 Hijri

Hammoud Abbas
President of the State of Palestine
President of the Executive Committee of the Palestine Liberation Organization