Palestine Monetary Authority Circular No. 16/2019: Instructions on Politically Exposed Persons

PALESTINE MONETARY AUTHORITY

Circular No. (16 / 2019) To all specialized lending institutions operating in Palestine Date: Sunday, January 13, 2019

Subject: Instructions on Politically Exposed Persons

Attached are the Instructions of the National Committee for Combating Money Laundering and Terrorist Financing No. (1) of 2018, published in Official Gazette No. (149) regarding "Politically Exposed Persons," and therefore, we emphasize the necessity of full compliance with the provisions of the aforementioned Instructions.

Supervision and Inspection Department Palestine Monetary Authority

Enclosure: Instructions on Politically Exposed Persons.

Copy: Honorable Members of the Financial Monitoring Unit.

---

2018/11/28 Palestinian Facts Issue (149)

Instructions No. (1) of 2018 Regarding Politically Exposed Persons

The National Committee for Combating Money Laundering and Terrorist Financing, Based on the provisions of Law-Decree No. (20) of 2015 regarding the combating of money laundering and terrorist financing and its amendments, particularly the provisions of Articles (6), (14/20) thereof, And based on the powers delegated to us, And in pursuit of the public interest,

We have issued the following Instructions:

Article (1) Definitions

1. The words and phrases contained in these Instructions shall have the meanings assigned to them below, unless the context indicates otherwise: The Law: Law-Decree No. (20) of 2015 regarding the combating of money laundering and terrorist financing and its amendments. The Committee: The National Committee for Combating Money Laundering and Terrorist Financing, established pursuant to the provisions of Article (19) of the Law. The Unit: The Financial Monitoring Unit, established pursuant to the provisions of Article (23) of the Law. Financial Institution: Any natural or legal person subject to the laws in force in the State of Palestine, whose profession or activities are related to any of the activities specified in Table No. (1) attached to the Law, whether practiced for their own benefit or for the benefit of their clients. Specified Non-Financial Businesses and Professions: The businesses and professions listed in Table No. (2) attached to the Law. Client: The natural or legal person who has a business relationship with any of the financial institutions or any of the specified non-financial businesses and professions. Politically Exposed Person (PEP): A person, their family members, and close associates who hold or have held, whether in Palestine or abroad, public political offices or senior positions, which include, for example, the categories stipulated in Article (3) of these Instructions. Trust: A legal relationship whereby the settlor places assets under the control of the trustee for the benefit of a beneficiary or for a specific purpose, and such assets form assets independent of the trustee's property, and the right to the trustee's assets remains in the name of the settlor or in the name of another person on behalf of the settlor. Legal Arrangement: The legal relationship arising between several parties pursuant to an agreement, including trusts or any similar legal arrangements. Beneficial Owner: The natural person who owns or exercises actual control, directly or indirectly, and includes the natural person on whose behalf a transaction is conducted, as well as the natural person who exercises actual control over a legal person or legal arrangement.
2. The definitions contained in Law-Decree No. (20) of 2015 regarding the combating of money laundering and terrorist financing and its amendments shall apply wherever they appear in these Instructions.

Article (2) Scope of Application The provisions of these Instructions shall apply to financial institutions and specified non-financial businesses and professions, and their branches operating abroad, to the extent permitted by the laws and regulations in force in the countries where those branches operate.

Article (3) Categories of Politically Exposed Persons The categories of Politically Exposed Persons fall under the following classification:

1. Public political offices or senior positions, which include, for example: a. The Head of State, their advisors, and the heads of institutions attached to the Presidency. b. The Prime Minister and members of the Council of Ministers, and those in their rank. c. Deputy Ministers, and those in their rank. d. Directors and General Managers in government and public positions, and those in their rank. e. Directors and heads of public bodies and institutions, and those in their rank. f. The Head and members of the Legislative Council. g. The Head and members of the Judicial Council. h. Judges of courts at all levels. i. Members of the Public Prosecution. j. Directors and heads of security agencies, and officials therein, and directors of public security departments and sections in governorates and districts. k. Directors and heads of the Palestinian Public Security, and officials therein, and directors of public security departments and sections in governorates and districts. l. Leaders and senior ranks in political parties and Palestinian factions, and those with important positions in these parties and factions.
2. Presidents, vice presidents, and directors of local and foreign charitable institutions, associations, and non-governmental organizations, and members of boards of directors.
3. Ambassadors, consuls, and members of the diplomatic corps.
4. Presidents and directors of international organizations, their deputies, and their representatives.
5. Executive officials in state-owned companies.

Article (4) Risk-Based Approach Financial institutions and specified non-financial businesses and professions are committed to identifying, understanding, and assessing risks, and applying the risk-based approach in due diligence procedures with Politically Exposed Persons as stipulated in Article (6) of the Law, and to establishing the necessary policies, strategies, and measures for this purpose.

Article (5) Enhanced Due Diligence In addition to the due diligence procedures stipulated in Article (6) of the Law, financial institutions and specified non-financial businesses and professions must take the following measures regarding Politically Exposed Persons:

1. Establishing appropriate systems and policies for risk management to determine whether the client or beneficial owner is a Politically Exposed Person, whether local or foreign, including their family members and close associates.
2. Obtaining senior management approval before establishing or continuing a business relationship with them.
3. Taking reasonable measures to determine the source of wealth and funds for Politically Exposed Persons, based on legally recognized data to verify their source.
4. Conducting continuous monitoring of the business relationship, verifying its integrity, and its proportionality to the financial activity, and exercising special care in their dealings, and the transactions carried out with any of them, and the purpose of those transactions, and recording the results in the records.

Article (6) Insurance Policy Risks Financial institutions and specified non-financial businesses and professions must establish and take the necessary measures to determine whether the Politically Exposed Person is the beneficial owner of a life insurance policy, and if so, they must do the following:

1. Notify senior management before paying out life insurance proceeds, and conduct a thorough review of the business relationship.
2. Consider reporting to the Unit using the reporting form approved by the Committee for this purpose.

Article (7) Repeal

1. Instructions No. (1) of 2014 regarding Politically Exposed Persons are repealed.
2. Everything inconsistent with the provisions of these Instructions is repealed.

Article (8) Entry into Force All competent authorities shall, each within their respective competence, implement the provisions of these Instructions, and they shall be effective from the date of their publication in the Official Gazette.

Issued in Ramallah on: 2018/11/1 AD Corresponding to: 23/Muharram/1440 AH

The National Committee for Combating Money Laundering and Terrorist Financing

---

PALESTINE MONETARY AUTHORITY

Circular (209/2018) Wednesday, September 19, 2018 To all banks operating in Palestine

Subject: Politically Exposed Persons (PEPs)

In order to enhance the environment for combating money laundering and terrorist financing in Palestine in accordance with the provisions of Law-Decree No. (20) of 2015 regarding "Combating Money Laundering and Terrorist Financing" and the instructions issued by the National Committee pursuant thereto, and in accordance with best international standards and practices related to Politically Exposed Persons (PEPs), we emphasize the following:

1. Full compliance with the provisions of Law-Decree No. (20) of 2015 and the instructions issued pursuant thereto regarding the management of accounts of these persons and their close associates.
2. Providing us with information on what the bank has done regarding the following: a. The extent to which approved policies and procedures are provided regarding enhancing identification and verification procedures for these persons and their sources of wealth and funds, and exercising enhanced and strengthened due diligence on financial transactions executed on their behalf. b. The extent to which the banking system and the bank's money laundering and terrorist financing combating systems are prepared to:

• Determine the risk level of these persons and classify them under the category of "Politically Exposed Persons and their close associates," providing us with the basis for classifying clients within this category.
• Issue alerts when financial transactions are executed on behalf of these persons.
• Provide and extract supervisory reports for the supervision of accounts of these persons and financial transactions executed on their behalf, specifying the types and contents of those reports.
• Extract a list of Politically Exposed Persons and their close associates, showing the names, account numbers, personal identification numbers, risk levels, and reasons for inclusion in this category of clients.

3. Providing us with a periodic (quarterly) statement in Excel file format of Politically Exposed Persons and their close associates and the total transactions executed on their behalf, to be provided starting from the end of the third quarter of the current year on a quarterly basis, according to the data specified in the attached statement, with the list to be sent no later than the fifth business day after the end of each quarter to the following email address for the Money Laundering and Terrorist Financing Combating Department: AML-CFT@PMA.PS.
4. Banks must ensure compliance with the National Committee's instructions in this regard, specifically regarding the provision and updating of policies, procedures, and the banking system, and providing us with an action plan to rectify the situation no later than the end of the current year.

Supervision and Inspection Department Palestine Monetary Authority

Enclosure: Statement of Politically Exposed Persons and their close associates.

---

[Empty Table] List of Politically Exposed Persons and their close associates Annual Total during the Quarter: 0 [Table Columns:] Client Name | Client ID Number | Branch Type | Account Number | Account Opening Date | Risk Level | Economic Sector | Total Deposit Transactions | Total Withdrawal Transactions | Total Outward Remittances | Total Inward Remittances | Total Outward Checks | Total Cleared Checks | Total International Transactions | Total Local Transactions | Total Facilities Granted | Total Net Income | Notes