Law No. (41) of 2022 concerning National Payments

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Official Gazette Office 67 Reference No.: 193-8-2022 Issue 193, Date: 2022/08/14 Law No. (41) of 2022 concerning National Payments

President of the State of Palestine,
Chairman of the Executive Committee of the Palestine Liberation Organization (PLO),

Based on the Basic Law of the PLO, and the amended Basic Law of 2003 and its amendments, after reviewing Law No. (2) of 1997 concerning the Palestine Monetary Authority and its amendments, and Evidence Law in Civil and Commercial Matters No. (4) of 2001 and its amendments, and Law Decree No. (9) of 2010 concerning Banks and its amendments, and Law Decree No. (15) of 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, in the public interest and to achieve it, 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 their respective meanings unless the context indicates otherwise:
Monetary Authority: The Palestine Monetary Authority.
Payments System: A set of instruments, procedures, and rules for transferring funds among members or between them. The system includes the members and the operating entity.
Operator: The Monetary Authority or a person licensed by the Monetary Authority to operate the payments system.
Electronic Signature: The electronic data used by a person for signing, which is attached to or logically associated with other electronic data.
Digital Financial Identity: A set of instruments and procedures used to identify a specific person, aggregating electronic attributes for the purpose of benefiting from financial services in accordance with this Law Decree and prevailing legislation in Palestine. Authentication: Procedures that enable verification of the user's identity. Electronic Financial Transfer: A fund or securities transfer order executed or implemented wholly or partially by electronic means. Collateral: Assets provided by a member to ensure sufficient liquidity to meet its obligations in the payments system. Financial Instrument: All financial instruments issued by the Monetary Authority or on behalf of the Palestinian Government, including treasury bills, debt instruments, certificates of deposit, bonds, promissory notes, and any other financial instruments. Electronic Document: Any content stored electronically, whether text, audio, visual, or auditory. Electronic Register: A set of information that collectively constitutes a description of a natural or legal person, or relates to payments services created, sent, received, or stored by electronic means. Payments Services: Services determined by the Monetary Authority regarding sending, receiving, and executing payment orders in circulating currencies. They include issuing and managing payment instruments and operating payments systems. Payment Order: Instructions issued by a payer or payee to the member or company to execute a payment transaction in any circulating currency for transferring or withdrawing funds, regardless of any obligations between the payer and payee. Payment Instrument: A dedicated device or devices, also including a set of agreed procedures for using them to execute a payment transaction. Irrevocability: A user-issued payment or transfer order 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 payments system. Payments Services Company: A company registered under the law and licensed to provide payments services. Financial Technology (FinTech) Company: A company registered under the law and licensed to provide financial technology services. Company: A payments services company or a FinTech company. Electronic "Know Your Customer" (KYC) Register: The central "Know Your Customer" database supervised by the Monetary Authority to facilitate customer inquiry operations and apply due diligence obligations by financial institutions electronically. Electronic Money: Electronically stored monetary value representing an obligation on the issuer, issued against funds for executing payment orders between users of payments services. Electronic Money Guarantee Account: The company's account opened at any licensed bank to match the outstanding balance of electronic money issued by the company in accordance with conditions set by the Monetary Authority. Person: A natural or legal person. User: The person using
payments services and financial technology services as a payer or payee. Member: A legal person licensed to directly or indirectly exchange transactions, clear, and settle in accordance with the instruments, procedures, and rules of the payments system. Virtual Assets: A digital representation of value or rights that can be traded, transferred, or stored electronically, and may be used for payment or investment. Virtual assets do not include the digital representation of official currencies, securities, and other financial instruments. Virtual Assets Service Provider (VASP): A person who performs one or more activities or operations related to virtual assets, including transferring, exchanging, managing, or holding them, for the benefit of any other person or on their behalf. 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 deduction from the payer's account for the benefit of the payee upon 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 payments system, the operator, payments services companies, FinTech companies, and virtual assets service providers.
2. All non-cash payment orders and transactions agreed by the parties to be executed by electronic means.
3. All electronic financial transfers, the electronic register, electronic signatures, and any transfers or settlements made using payment instruments for the purpose of executing payments services.
4. Electronic clearing of cheques and financial instruments.

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

1. Regulate and facilitate the use of electronic means in conducting financial transactions, subject to other laws.
2. Regulate and facilitate the use of new types of payment services amid the development of financial technology.
3. Regulate and facilitate electronic communications through reliable electronic records.
4. Regulate and facilitate e-commerce and other electronic transactions, and enhance the development of legal and commercial infrastructure for secure application of e-commerce.
5. Regulate and facilitate the use of electronic authentication and payment-related electronic documents for fund transfers.
6. Reduce cases of forgery in electronic communications and subsequent alterations, as well as 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 communications and transactions.
8. Enhance public trust in the integrity and validity of electronic transactions, communications, and records.
9. Enhance the development of e-commerce and other transactions domestically and internationally by using electronic signatures.

Article (4)
Electronic Signature for Financial Institutions

1. An electronic signature shall be considered valid if verifiable according to strict authentication procedures stipulated in prevailing legislation. In all cases, it must meet the following conditions:
   a. It is uniquely linked to the signatory and identifies them. b. It is created by means under the sole control of the signatory.
   c. It ensures a link to the related document such that any subsequent alteration is detectable.
2. The Monetary Authority shall issue instructions governing the form and mechanisms for applying electronic signatures by financial institutions.

Article (5)
Digital Financial Identity and Electronic KYC Register

1. The Monetary Authority shall issue instructions governing the issuance, protection, use, handling, and information exchange of digital financial identities.
2. The Monetary Authority shall issue instructions governing the establishment, management, and supervision of the infrastructure for digital financial identities.
3. The Monetary Authority shall establish the necessary infrastructure to activate and apply digital financial identities for customers of financial institutions.
4. The Monetary Authority shall establish the electronic KYC register to enable financial institutions to authenticate, identify, and verify customers' digital financial identity data.
5. The Monetary Authority shall issue instructions governing the establishment, management, and supervision of the infrastructure for the electronic KYC register.

Article (6)
Net Financial Positions and Finality of Payments

1. The electronic register, electronic contract, message, transaction, and electronic signature shall produce the same legal effects as written documents, records, and signatures under prevailing legislation regarding their binding nature on parties or admissibility as evidence.
2. All electronic financial transfers made in accordance with this Law Decree shall have legal evidentiary value against their parties.
3. For the purpose of executing payment transactions, expressions of offer and acceptance shall be made in the agreed manner between the member or company and the user, including electronic means.
4. Net financial positions shall be binding on all parties.
5. Payment orders received by the payments system shall be final and irrevocable or subject to appeal, in accordance with instructions issued by the Monetary Authority.

Article (7)
Supervisory Powers and Service Provision

1. The Monetary Authority is exclusively authorized to supervise payments systems in accordance with instructions issued for this purpose.
2. The Monetary Authority is exclusively authorized to provide payments settlement, clearing, and securities payment services related to members. To achieve this, it may establish, operate, or participate in the ownership of any payments system.
3. The Monetary Authority is exclusively authorized to supervise payments services companies, FinTech companies, and virtual assets service providers in accordance with instructions issued for this purpose.
4. Electronic records held by the Monetary Authority or any legally authorized entity shall be relied upon to prove ownership and pledge of securities. The Monetary Authority shall issue necessary instructions for managing collateral that may be used and accepted as settlement guarantees, including liquidation procedures.
5. The Monetary Authority may take mandatory measures against any supervised entities as the supervisory authority for clearing and settlement systems, and may take corrective and punitive measures enforceable by any person under the law.

Article (8)
Licensing

1. No person shall provide any payments services or financial technology services without obtaining a license from the Monetary Authority.
2. The Monetary Authority shall issue instructions governing the provision of payments services and financial technology services, including:
   a. Licensing conditions and requirements for payments services companies and FinTech companies. b. Permitted activities by electronic means, application systems, required security and protection systems, their implementation, monitoring, and development.
   c. Conditions and specifications of the electronic register, as well as conditions for 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 their storage format. f. Conditions required for an electronic document or record to be considered original. g. Obligations arising from any electronic transactions, including execution and settlement times, and related party obligations. h. Conditions and limits for electronic financial transfers and the specified period thereof.
   i. Conditions for transferable or negotiable electronic instruments, provided they do not conflict with other laws.
   j. Minimum and maximum limits for fees and commissions charged by payments services companies and FinTech companies for all types of services provided. k. Issuance of necessary instructions, standards, and procedures to regulate executed work, and issuing any instructions deemed appropriate to achieve the objectives of this Law Decree.
3. For registration with the Ministry of National Economy and completing the licensing application, any person wishing to provide payments services, financial technology services, or virtual assets services must obtain prior written approval from the Monetary Authority before registration, in accordance with instructions issued by the Monetary 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 instructions issued by the Monetary Authority.
2. The electronic money guarantee account shall be 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 may not be levied against the electronic money guarantee account for any debts, claims, or rights incurred by the company, except for debts and claims specific to users of electronic money.
4. The electronic money guarantee account is exempt from procedures for company or bank dissolution, bankruptcy, or liquidation as stipulated by law.
5. The Monetary Authority shall issue instructions specifying the conditions and terms for the electronic money guarantee account.

Article (10)
Supervision and Inspection

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

Article (11)
Collateral

1. The operator may liquidate collateral and take appropriate measures if any member is unable or likely to be unable to meet its obligations.
2. The Monetary Authority shall issue necessary instructions to regulate collateral and liquidation procedures.

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

1. Monthly payments system membership fees, capped at (5,000) five thousand US dollars or its equivalent in the legally circulating currency per month.
2. Cheque clearing and transaction settlement fees, capped at (5) five US dollars or its equivalent in the legally circulating currency per cheque or transaction.
3. The Monetary Authority shall collect from companies the following fees:
   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 Monetary Authority shall collect from virtual assets service providers the following fees:
   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 Monetary Authority shall issue necessary instructions to implement the provisions of this Article.

Article (13)
Companies and Virtual Assets Service Providers Register

1. The Monetary Authority shall maintain a central register of all licensed companies and virtual assets service providers.
2. The Monetary Authority shall publish on its website and any other appropriate advertising medium a list of names of licensed companies and virtual assets service providers.
3. The Monetary Authority may classify companies into categories according to issued instructions.

Article (14)
Virtual Assets

1. No person or other entity shall trade virtual assets or operate as a virtual assets service provider in the State of Palestine until regulated by the Monetary Authority based on instructions issued for this purpose.
2. Competent authorities, in coordination with the Monetary Authority, shall determine persons trading virtual assets or providing virtual assets services without a license and refer them to the Public Prosecution.

Article (15)
Direct Debit

1. Any person may issue a direct debit for future payments, 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 shall not cancel an irrevocable direct debit order except with the payee's consent or by a ruling from a competent court.
4. The debited member shall not refuse to pay the value of a direct debit order if they have sufficient funds.
5. If the debited member refuses to pay an irrevocable direct debit order, they must prove the reason for refusal via a document issued by them specifying the parties to the direct debit, its value, submission date, and due date.
6. A document issued by the member in accordance with paragraph (5) of this Article shall be considered an executive instrument under the law.
7. The Monetary Authority shall issue instructions governing the implementation of this Article.

Article (16)
Anti-Money Laundering
Those subject to this Law Decree must comply with the prevailing Anti-Money Laundering and Counter-Terrorist Financing Law, regulations, and instructions issued thereunder.

Article (17)
Violations and Penalties

1. The member must maintain sufficient balances in its accounts to settle clearing results and cover net financial positions.
2. The Monetary Authority may, upon establishing a violation by the company or virtual assets service provider of this Law Decree and issued instructions, impose any of the following penalties:
   a. Issuing an initial 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 assets service provider not less than (3,000) three thousand US dollars and not exceeding (250,000) two hundred fifty thousand US dollars or its equivalent in legally circulating currencies. f. Revoking the license granted to the company or virtual assets service provider.
3. Each person violating this Law Decree and issued instructions shall be penalized as follows:
   a. A fine not less than (5,000) five thousand US dollars and not exceeding (250,000) two hundred fifty thousand US dollars or its equivalent in legally circulating currency if sufficient balances are not available after the end of the business day. b. A fine not less than (50) fifty US dollars and not exceeding (20,000) twenty thousand US dollars or its equivalent in legally circulating currency if sufficient balances are not provided by the specified settlement time before the end of the business day.
4. Each person conducting payments services, financial technology services, and dealing with virtual assets without obtaining the required approvals and licenses under this Law Decree and instructions 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 legally circulating currency, or by both penalties.
5. Each person conducting payments services, financial technology services, and dealing with virtual assets without obtaining licenses shall be referred to the Public Prosecutor to take legal action.

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

Article (19)
Regularization of Status
Persons conducting payments services, financial technology services, are granted a six-month period from the effective date of this Law Decree to regularize their status in accordance with its provisions, which may be extended once for a period not exceeding six months by decision of the Monetary Authority.

Article (20)
Repeal and Conflict

1. Law Decree No. (17) of 2012 concerning the National Payments Settlement Law is repealed.
2. All systems, instructions, decisions, and guidelines issued by the Monetary Authority shall remain in force to the extent they do not conflict with this Law Decree until repealed and replaced by systems, instructions, and guidelines issued under this Law Decree.
3. Everything conflicting with the provisions of this Law Decree is repealed.

Article (21)
Entry into Force
All competent authorities shall implement the provisions of this Law Decree, each within their respective jurisdiction. It shall be effective from the date of its publication in the Official Gazette. Issued in Ramallah on: 2022/08/08 AD Corresponding to: /10 Muharram 1444 AH Hamoud Abbas President of the State of Palestine, Chairman of the Executive Committee of the PLO.