Palestine Monetary Authority

PALESTINE MONETARY AUTHORITY

Circular No. (17/2019)

To all banks operating in Palestine
Date: Sunday, January 13, 2019

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Subject: Instructions for Politically Exposed Persons

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

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Supervision and Inspection Department
Palestine Monetary Authority

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Attachment: Instructions for Politically Exposed Persons. Copy: Honorable Financial Monitoring Unit.

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www.pma.ps

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Ramallah & Al-Bireh Governorate - Palestine P.O. Box 452 info@pma.ps | Fax: +970 2 2415310 | Tel: +970 2 2415251 Gaza - Palestine P.O. Box 4026 Fax: +970 8 2844487 | Tel: +970 8 2825713

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Instruction No. (1) of 2018

Regarding Politically Exposed Persons

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 Articles (6) and (14/20) thereof, and based on the powers delegated to us, and in pursuit of the public interest,

We have issued the following instructions:

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Article (1) Definitions

1. The words and expressions used 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 Article (19) of the Law.
   • The Unit: The Financial Monitoring Unit, established pursuant to 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 business is linked to any of the activities outlined in Table No. (1) attached to the Law, whether conducted for their own benefit or for their clients.
   • Designated Non-Financial Businesses and Professions: The businesses and professions listed in Table No. (2) attached to the Law.
   • Client: A natural or legal person who has a business relationship with any financial institution or any of the designated non-financial businesses and professions.
   • Politically Exposed Person (PEP): A person, their family members, close associates, and partners who hold or have held, whether in Palestine or abroad, public political office or senior positions, which include, but are not limited to, the positions stipulated in Article (3) of these instructions.
   • Trust: A legal relationship under which the settlor places assets under the control of the trustee for the benefit of a beneficiary or for a specific purpose, and those assets form property independent of the trustee's estate, with the right to the trustee's assets remaining in the name of the trustee or 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.

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Article (2) Scope of Application

The provisions of these instructions shall apply to financial institutions and designated 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.

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Article (3) Categories of Politically Exposed Persons

The categories of politically exposed persons shall be classified as follows:

1. Public political offices or senior positions, including, but not limited to:

   • a. Head of State, their advisors, and heads of institutions affiliated with the Presidency.
   • b. Prime Minister and members of the Cabinet, and those in their rank.
   • c. Deputy Ministers, and those in their rank.
   • d. Directors and General Managers in government and public service positions, and those in their rank.
   • e. Directors and heads of public bodies and institutions, and those in their rank.
   • f. Head and members of the Legislative Council.
   • g. Head and members of the Judicial Council.
   • h. Judges of courts at all levels.
   • i. Members of the Public Prosecution.
   • j. Directors and commanders of security agencies, and officials therein, and directors of their departments and sections in public administrations and governorates.
   • k. Directors and commanders of the Palestinian General Security, and officials therein, and directors of departments and sections of General Security in public administrations and governorates.
   • l. Leaders and senior ranks in Palestinian political parties and civil society organizations, and individuals holding important positions in these parties and organizations.

2. Heads, deputies, and directors of local and foreign charitable institutions, associations, and non-governmental organizations, and members of their boards of directors.

3. Ambassadors, consuls, and members of the diplomatic corps.

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Article (4) Risk-Based Approach

Financial institutions and designated non-financial businesses and professions shall commit to identifying, understanding, and assessing risks, and applying a risk-based approach in due diligence procedures with politically exposed persons as stipulated in Article (6) of the Law, and establishing the necessary policies, strategies, and measures for this purpose.

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Article (5) Due Diligence

In addition to the due diligence procedures stipulated in Article (6) of the Law, financial institutions and designated non-financial businesses and professions shall take the following measures regarding politically exposed persons:

1. Establish 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. Obtain senior management approval before establishing or continuing a business relationship with them.
3. Take reasonable measures to determine the source of wealth and funds for politically exposed persons, based on legally recognized data to verify their source.
4. Conduct ongoing monitoring of the business relationship, verify its integrity, assess its consistency with financial activity, exercise special care in dealings with them and transactions conducted with any of them, determine the purpose of such transactions, and record the results in dedicated records.

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Article (6) Insurance Policy Risks

Financial institutions and designated non-financial businesses and professions shall establish and take necessary measures to determine whether a politically exposed person is the beneficiary of a life insurance policy. If confirmed, they shall 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.

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Article (7) Repeal

1. Instruction No. (1) of 2014 regarding Politically Exposed Persons is hereby repealed.
2. Any provision conflicting with these instructions is hereby repealed.

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Article (8) Entry into Force and Implementation

All competent authorities shall implement the provisions of these instructions according to their respective jurisdictions, and they shall take effect from the date of their publication in the Official Gazette.

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

National Committee for Combating Money Laundering and Terrorist Financing

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Circular No. (209/2018)

Wednesday, September 19, 2018
To all banks operating in Palestine

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Subject: Politically Exposed Persons (PEPs)

Committed to the Palestine Monetary Authority's goal of enhancing the money laundering and terrorist financing combating environment 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 thereunder, and in alignment with international standards and practices related to Politically Exposed Persons (PEPs), we emphasize the following:

1. Strict compliance with the provisions of Law-Decree No. (20) of 2015 and the instructions issued thereunder regarding the management of accounts for these persons and their close associates.

2. Provide us with a report on the bank's implementation of 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 applying enhanced and stringent due diligence on financial transactions executed on their behalf.
   • b. The extent to which the banking system and the bank's anti-money laundering and counter-terrorist financing systems are equipped 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 reasons for classifying clients under this category.
     • Establish arrangements when executing financial transactions on behalf of these persons.

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3. Provide us with a periodic (quarterly) report in Excel file format listing Politically Exposed Persons and their close associates, along with the total transactions executed on their behalf. This shall be submitted starting from the end of the third quarter of the current year on a quarterly basis, in addition to the data specified in the attached report. The report must be sent no later than the fifth working day after the end of each quarter to the following email address of the Anti-Money Laundering and Counter-Terrorist Financing Department: AML-CFT@PMA.PS

4. Banks must ensure compliance with the National Committee's instructions, specifically regarding the provision and updating of policies, procedures, and the banking system, and provide us with an action plan to rectify any deficiencies by the end of the current year at the latest.

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Supervision and Inspection Department
Palestine Monetary Authority

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Attachment: Report on Politically Exposed Persons and their close associates.

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www.pma.ps

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Ramallah - Palestine P.O. Box 452 | Tel: +970 2 2415250 | Fax: +970 2 2415310 Gaza - Palestine P.O. Box 4026 | Tel: +970 8 2825292 | Fax: +970 8 2844487 Email: info@pma.ps

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Politically Exposed Persons (PEPs) Reporting Form

Serial No.	Client Name	ID Number	Gender	Date of Birth	Client Nationality	Passport Number	Relationship Type with Client	Is it a new client?	Is it a VIP client?	Is it a high-risk client?	Is it a financial risk client?	Is it a political risk client?	Is it a security risk client?	Is it another risk client?	Notes