Regulatory Framework for the Electronic Provision of Cross-Border Financial Remittances

Regulatory Framework for the Electronic Provision of Cross-Border Financial Remittances Central Bank of Jordan October 2020

2 Contents Introduction............................................................................................................................................... 4 First: Basic Requirements for Providing the Service .................................................................................................... 5 Second: Procedures for Executing Outward Cross-Border Financial Remittances (Remittances Outward).................................. 7

1. Executing Outward Cross-Border Financial Remittances via the Electronic Wallet Application ................................................ 7
2. Executing Outward Cross-Border Financial Remittances via the Electronic Channels of the Licensed Exchange Company....................... 10 Third: Procedures for Executing Inward Cross-Border Financial Remittances (Remittances Inward )................................... 13
3. Receiving Outward Cross-Border Financial Remittances via the Electronic Wallet Application Directly............................. 13
4. Receiving Outward Cross-Border Financial Remittances via the Electronic Channels of the Licensed Exchange Company...................... 16 List of Figures Figure No. (1): Executing Electronic Transfer via the Electronic Wallet Application ................................................... 10 Figure No. (2): Executing Electronic Transfer via the Electronic Channels of the Exchange Company......................................... 13 Figure No. (3): Receiving Electronic Transfer via the Electronic Wallet Application Directly................................. 16 Figure No. (4): Receiving Electronic Transfer via the Electronic Channels of the Exchange Company ...................................... 20

3 Definitions For the purposes of this Regulatory Framework, the following words and phrases shall have the meanings assigned to them below, wherever they appear therein, unless the context indicates otherwise:

Central Bank: The Central Bank of Jordan.

Licensed Exchange Company: The company licensed to conduct exchange business and authorized to conduct the activity of issuing and receiving financial instruments and performing exchange operations in accordance with the prevailing laws, regulations, and instructions issued thereunder.

Electronic Payment and Transfer Company: The company licensed by the Central Bank to engage in any of the activities of providing payment services through the payment system using cash instruments or providing electronic money transfer services in accordance with the prevailing Payment and Electronic Money Transfer System Law, and is referred to in this Regulatory Framework as "Payment Service Provider".

Company: The Licensed Exchange Company and the Electronic Payment and Transfer Company.

Financial Remittances: Any financial transfer process carried out by the Company using any means, regardless of whether the issuer of the instrument is the same person who requested it, and provided that the payment or receipt process for the financial transfer is carried out electronically.

Cross-Border Financial Remittances: Financial Remittances in which the Company issuing the transfer or the Company receiving the transfer operates outside the Kingdom.

Electronic Wallet: A pre-paid electronic payment instrument issued to the customer, linked to mobile phone applications.

Interoperability: The process of interoperability of any components of the National Payment System in a manner that allows seamless participation of two or more points of issue, processing, or execution of payment or electronic money transfer operations.

Service: The service of issuing and receiving cross-border financial remittances executed electronically through the electronic channels of licensed exchange companies in an integrated manner and within levels of complete interoperability between the companies.

Intermediary Entity: According to the prevailing laws and regulations governing its operations, the external entity that deals with the Licensed Exchange Company and participates in executing the transfer without being the issuer or recipient of it, or the globally recognized electronic payment system approved or licensed by the Central Bank according to the prevailing laws and regulations.

4 Introduction In the context of regulating the National Payment System and developing it to ensure providing a comprehensive and efficient system for payment, clearing, and settlement in the Kingdom, and with the aim of establishing the necessary regulatory framework for achieving complete interoperability between the components of the National Payment System, this Regulatory Framework has been prepared to enable licensed exchange companies and licensed payment service providers from the Central Bank to provide the service of issuing and receiving cross-border financial remittances electronically in an integrated manner and within levels of interoperability and interoperability between the companies, specifically, and with the aim of providing this service directly through electronic channels or using electronic means for licensed exchange companies.

Despite the existence of many systems, tools, and payment methods, whether electronic or non-electronic (cash, bank drafts, etc.) through which cross-border financial remittances can be paid/received, the aim of this Regulatory Framework is limited to addressing the process of providing the aforementioned service through the electronic channels of payment service providers and in cooperation with licensed exchange companies.

Therefore, licensed exchange companies and payment service providers wishing to jointly provide the service of issuing and receiving cross-border financial remittances electronically in an integrated manner and within levels of interoperability among themselves; must comply with the minimum requirements and instructions contained in this Regulatory Framework.

Similarly, this Regulatory Framework also applies to electronic payment and transfer companies licensed by the Central Bank to engage in the activity of providing cross-border electronic money transfer services, which provide their services through any of the electronic payment systems approved or licensed by the Central Bank according to the prevailing laws and regulations, and to exchange companies wherever mentioned in this Guide.

5 First: Basic Requirements for Providing the Service Licensed exchange companies and electronic payment and transfer companies must comply with the following minimum basic requirements for providing the service:

a) Compliance with all requirements stipulated in the prevailing Anti-Money Laundering and Counter-Terrorist Financing Instructions and Regulations, including specifically:

1. Customer Due Diligence (CDD) measures.
2. Ensuring that all cross-border financial remittances contain all information of the transfer requestor and the beneficiary.
3. Compliance with comparing names and addresses contained in cross-border financial remittances against the UN Security Council sanctions list and the National List of Terrorists, and implementing the obligations contained in relevant international resolutions with binding force, emphasizing the full responsibility of each company regarding this matter.
4. Requiring any employee to disclose directly or indirectly, or using any means, without delay, any suspicion of money laundering or terrorist financing related to transactions, or any information related to it.
5. Maintaining all data, records, and documents related to cross-border financial remittances for the time period specified in the relevant instructions.

b) Meeting the minimum technical and technical requirements according to the prevailing Electronic Payment and Transfer System Technical and Technical Requirements Instructions and the prevailing Cyber Risk Mitigation Instructions.

c) Restricting the provision of the service to identified persons only, taking into consideration the necessary measures and precautions to prevent this.

d) Providing mechanisms, measures, and internal controls that enable monitoring and managing the transactions executed within the framework of this service within limits that take into account the level of transaction risk and the level of customer risk, and are consistent with any legislation issued regarding this matter, and that the monthly maximum limit for cross-border financial remittances, whether issued or received, is 5,000 Jordanian Dinars or its equivalent in foreign currencies for the requesting customer.

e) Restricting the provision of the service using electronic channels only, without allowing its provision through the counter channel or through agents.

f) Assessing the money laundering and terrorist financing risks for the service and documenting this in the company's policy regarding this matter, and re-evaluating it periodically or as soon as changes necessitate it, and taking the necessary measures to manage and mitigate risks, including customer and country or geographic area and technology risks, and the systems, tools, and transfer networks used by the company in providing the service.

g) Organizing the necessary agreements for providing the service, which must include at least the rights and obligations of both parties, including including the requirements and conditions contained in this Regulatory Framework, if the matter requires it.

h) Determining all fees to be charged for this service in coordination with the relevant authorities and informing customers clearly and issuing them at the time of or upon using the service, including fees charged in Jordanian Dinars or foreign currencies and vice versa (whichever applies), and complying with the foreign exchange rate list issued by the Central Bank, and payment service providers must observe Article /20/ of the prevailing Payment and Electronic Money Transfer System.

i) Providing appropriate mechanisms and measures that ensure customer protection and their rights in accordance with the prevailing laws and regulations regarding this matter, including taking all measures that protect vulnerable customers and that the service provided to them has clear characteristics and conditions that enable them to understand the nature and cost of the service, while considering the necessity of informing and disclosing to customers transparently about any changes to the fees associated with the service. In accordance with the instructions issued by the Central Bank regarding this matter, taking into consideration the necessity of providing mechanisms that enable customers to do the following:

1. Review the terms and conditions of providing the service to customers, which must be consistent with the requirements and instructions contained in this Regulatory Framework.
2. Track their cross-border financial remittance orders and be informed of the time required to execute those orders, whether during the issuance period of the instruments or their return or receipt of the received instruments in the electronic wallet of the beneficiary.
3. Any other measures or provisions that protect customers and their rights in accordance with the prevailing laws and regulations regarding this matter.

j) Establishing and adopting appropriate mechanisms and policies to handle the following exceptional cases:

1. Inability to credit the received cross-border financial remittances or the returned cross-border financial remittances to the electronic wallets of the customers benefiting from them for any reason.
2. Handling issued cross-border financial remittances that have been returned due to changes in the exchange rate that was applied when receiving those instruments and executed in foreign currencies, and determining the party that will bear the difference resulting from the re-application of the exchange rate.

k) Executing all necessary tests to ensure the success of providing the service in accordance with the minimum requirements and instructions contained in this Regulatory Framework, and launching the service effectively to the environment.

l) Announcing the Central Bank at least 10 days before the effective launch of the service to the environment, and the announcement letter must include the results of the experimental tests carried out for the service, and the Central Bank has the right during that period to require the company to delay the launch of the service to the environment to enable it to address any observations or indications of any type that were detected (if any).

m) Obtaining the prior written approval of the Central Bank in case there is any change to the procedures and instructions for providing the service that affects the mechanisms and instructions contained in this Regulatory Framework.

Second: Procedures for Executing Outward Cross-Border Financial Remittances (Remittances Outward)

1. Executing Outward Cross-Border Financial Remittances via the Electronic Wallet Application:

a) The customer, holder of the electronic wallet, enters the wallet application using his personal data, which are the username and password, then selects the cross-border transfer service and specifies the transfer amount, the transfer destination, and enters the transfer request data, including the beneficiary's data, which must include at least the following data and in accordance with those stipulated in the prevailing Anti-Money Laundering and Counter-Terrorist Financing Instructions and Regulations, as follows:

1. Beneficiary information, including: Full name, nationality, payment account number (if available).
2. Purpose of the transfer.
3. Relationship between the transfer requestor and the beneficiary.
4. Declaration from the transfer requestor that he is the true source of funds.
5. Country of transfer.
6. Any additional information or documents required to be provided by the payment service provider for the purpose of executing the transfer request.

b) In case the payment service provider deals with more than one licensed exchange company to provide the service, the payment service provider will provide a suitable interface to display a list of licensed exchange companies available to the customer to enable him to select the licensed exchange company intended to execute the transfer through it, as well as providing an interface displaying the open range of the external receiving entity and/or the payment system available to the customer to choose the electronic system intended to execute the transfer from among it, whether approved or licensed by the Central Bank; to compare them according to the criteria of cost and speed of transfer execution.

c) The payment service provider will take the necessary due diligence measures and obtain all information in accordance with the requirements and instructions stipulated in the prevailing Anti-Money Laundering and Counter-Terrorist Financing Instructions and Regulations, in executing the transfer request, and also to obtain the transfer request data from it to meet the standards of customer identity and compliance with the law for the purpose of managing the transfer request from it, including comparing names and addresses contained in the transfer request against the UN Security Council sanctions list and the National List of Terrorists and taking the necessary measures regarding this matter, including freezing funds.

d) In case the transfer request is rejected by the payment service provider for any reason, the process will be terminated, taking into account the regulations for reporting to the Anti-Money Laundering and Counter-Terrorist Financing Authority immediately if there is a suspicion that the transfer request is related to money laundering or terrorist financing according to the model or means approved by the Authority for this purpose and in accordance with the prevailing Anti-Money Laundering and Counter-Terrorist Financing Laws and Regulations and the relevant instructions issued thereunder.

e) In case the transfer request is approved by the payment service provider, it will be sent to the licensed exchange company, with all the necessary data for its execution attached, which must include at least the following, and must be kept completely:

1. Transfer requestor information, including: Full name, electronic wallet number, address, Jordanian national ID number or personal ID number and passport number for non-Jordanians, annual residence permit issued by the Ministry of Interior or a valid official certificate issued by the competent authority in case the customer is from a resident country or number of any other identity document approved by the competent authorities for non-Jordanians and their nationalities.
2. Beneficiary information, including: Full name, nationality, payment account number (if available).
3. Purpose of the transfer.
4. Relationship between the transfer requestor and the beneficiary.
5. Declaration from the transfer requestor that he is the true source of funds.
6. Country of transfer.
7. The unique reference number for the transfer request extracted from the payment service provider's system to enable tracking the transfer request between the licensed exchange company and the payment service provider at any time.
8. Transfer amount, transfer currency, fee amount agreed upon according to the transfer type and intermediary entity and receiving entity, and after calculating the exchange rate fees (if available), and any other information or documents agreed upon between the payment service provider and the licensed exchange company for the purpose of executing the transfer request.

f) The payment service provider will execute a debit entry for the value of the transfer request and the associated fees (if available) on the electronic wallet of the sending customer and execute a credit entry for that amount to the electronic wallet of the licensed exchange company, while observing the measures to distinguish the type of operation on the payment system via mobile phones to indicate that it is an "outward international transfer".

g) The transfer request will be received from the licensed exchange company attached with all the necessary data for its execution and mentioned in paragraph (e) above, to enable it to take the necessary due diligence measures and obtain all information according to the standards and instructions stipulated in the prevailing Anti-Money Laundering and Counter-Terrorist Financing Instructions and Regulations, in executing the transfer request to the outside, including obtaining the customer's data from it to meet the standards of customer identity and compliance with the law for the purpose of managing it from it, including comparing names and addresses contained in the transfer request against the UN Security Council sanctions list and the National List of Terrorists and taking the necessary measures regarding this matter, including freezing funds.

h) In case the transfer request is approved by the licensed exchange company, it will proceed to execute it outside according to the operational lines and measures allowed by the Central Bank and in accordance with the prevailing laws and regulations governing its operations, and the licensed exchange company will notify the payment service provider of the approval of the transfer request and provide it with the unique reference number for the transfer (the number linked to the transfer from the receiving entity in the outside), after which the payment service provider will communicate this number to the sending customer through an appropriate electronic means.

i) In case the transfer request is rejected by the licensed exchange company or the external receiving entity or the intermediary entity (if available) for any reason, the licensed exchange company will notify the payment service provider of the rejection of the transfer request, and the rejection of the transfer request must be for reasons related to requirements considered in assessing the existence of suspicion of the transfer operation or any of its parties being related to money laundering or terrorist financing and reporting to the Authority immediately if there is no model or means approved by the Authority for this purpose and in accordance with the prevailing Anti-Money Laundering and Counter-Terrorist Financing Laws and Regulations and the relevant instructions issued thereunder.

j) After rejecting the transfer request, the payment service provider is obliged to execute a debit entry for the value of the transfer request and the associated fees (if available) on the electronic wallet of the licensed exchange company and execute a credit entry for that amount to the electronic wallet of the sending customer, while observing the measures to distinguish the type of operation on the payment system via mobile phones to indicate that it is an "outward international transfer rejection", and the possibility of linking the financial transaction related to rejecting the transfer request with the unique reference number of the financial transaction related to the main transfer request so that it can be tracked.

Figure No. (1): Executing Electronic Transfer via the Electronic Wallet Application

2. Executing Outward Cross-Border Financial Remittances via the Electronic Channels of the Licensed Exchange Company:

a) Customers wishing to use the service - after registering on the electronic channels provided by the licensed exchange company (Mobile App & Internet Portal) to execute cross-border financial remittances issued - must visit the licensed exchange company once for the purpose of activating their registered accounts on the electronic channels in accordance with the number of accounts of the licensed exchange company by completing the identification measures according to the customer and obtaining the necessary documents to obtain the data that these customers will submit in accordance with the prevailing laws and regulations governing the operations of licensed exchange companies related to this matter and specifically the prevailing Anti-Money Laundering and Counter-Terrorist Financing Instructions and Regulations.

b) In case the customer wishes to execute an issued transfer request, he must enter any of the electronic channels of the licensed exchange company (Mobile App & Internet Portal) using his personal data, which are the username and password, then select the cross-border transfer service and specify the transfer amount, the transfer destination, and enter the transfer request data, including the beneficiary's data, which must include at least the following data and in accordance with those stipulated in the prevailing Anti-Money Laundering and Counter-Terrorist Financing Instructions and Regulations, as follows:

1. Beneficiary information, including: Full name, nationality, payment account number (if available).
2. Purpose of the transfer.
3. Relationship between the transfer requestor and the beneficiary.
4. Declaration from the transfer requestor that he is the true source of funds.
5. Country of transfer.
6. Any additional information or documents required to be provided by the licensed exchange company for the purpose of executing the transfer request.

c) The licensed exchange company will take the necessary due diligence measures and obtain all information according to the standards and instructions stipulated in the prevailing Anti-Money Laundering and Counter-Terrorist Financing Instructions and Regulations, and obtain the transfer request data from it to meet the standards of customer identity and compliance with the law for the purpose of managing it from it, including comparing names and addresses contained in the transfer request against the UN Security Council sanctions list and the National List of Terrorists and taking the necessary measures regarding this matter, including freezing funds.

d) In case the transfer request is rejected by the licensed exchange company for any reason, the process will be terminated, taking into account the regulations for reporting to the Anti-Money Laundering and Counter-Terrorist Financing Authority immediately if there is a suspicion that the transfer request is related to money laundering or terrorist financing according to the model or means approved by the Authority for this purpose and in accordance with the prevailing Anti-Money Laundering and Counter-Terrorist Financing Laws and Regulations and the relevant instructions issued thereunder.

e) In case the transfer request is approved by the licensed exchange company, it will, through its electronic channels, ask the customer to confirm his desire to pay the transfer amount from his electronic wallet by entering the payment data (wallet number, selecting the payment service provider), after which the licensed exchange company will send the transfer request to the relevant payment service provider attached with all the necessary data for its execution, which must include at least the following, and must be kept completely:

1. Transfer requestor information, including: Full name, electronic wallet number.
2. Full name of the beneficiary and his nationality.
3. Country of transfer.
4. The unique reference number for the transfer request, which is extracted from the electronic system of the licensed exchange company to enable tracking the transfer request.
5. Transfer amount, transfer currency, fee amount agreed upon according to the transfer type and intermediary entity and receiving entity, and after calculating the exchange rate fees (if available), and any other information or documents agreed upon between the licensed exchange company and the payment service provider for the purpose of executing the transfer request.

f) After that, the transfer request will be received from the payment service provider attached with the necessary data for its execution and mentioned in paragraph (e) above, to enable the payment service provider to take the necessary due diligence measures and obtain all information according to the standards and instructions stipulated in the prevailing Anti-Money Laundering and Counter-Terrorist Financing Instructions and Regulations, in executing the payment order, and obtaining the transfer request data from it to meet the standards of customer identity and compliance with the law for the purpose of managing it from it, including comparing names and addresses contained in the transfer request against the UN Security Council sanctions list and the National List of Terrorists and taking the necessary measures regarding this matter, including freezing funds.

g) In case the transfer request is approved by the payment service provider; it will send a one-time password (OTP) to the customer on his registered mobile phone number (electronic wallet number), to enable the customer to enter this number on the electronic channel of the licensed exchange company, after which the licensed exchange company will provide this number to the payment service provider to verify it and approve the corresponding payment order.

h) The payment service provider will execute a debit entry for the value of the transfer request and the associated fees (if available) on the electronic wallet of the sending customer and execute a credit entry for that amount to the electronic wallet of the licensed exchange company; while observing the measures to distinguish the type of operation on the payment system via mobile phones to indicate that it is an "outward international transfer", then the licensed exchange company will execute the payment order.

i) The licensed exchange company will proceed to execute the transfer request outside according to the operational lines and measures allowed by the Central Bank and in accordance with the prevailing laws and regulations governing its operations, and will provide the sending customer with the unique reference number for the transfer request through an appropriate electronic means.

j) In case the transfer request is rejected for any reason by the licensed exchange company or the external receiving entity or the intermediary entity (if available), the licensed exchange company will notify the payment service provider that the transfer request has been rejected, and the rejection of the transfer request must be for reasons related to requirements considered in assessing the existence of suspicion of the transfer operation or any of its parties being related to money laundering or terrorist financing and reporting to the Authority immediately if there is no model or means approved by the Authority for this purpose and in accordance with the prevailing Anti-Money Laundering and Counter-Terrorist Financing Laws and Regulations and the relevant instructions issued thereunder.

k) After rejecting the transfer request, the payment service provider is obliged to execute a debit entry for the value of the transfer request on the electronic wallet of the licensed exchange company and execute a credit entry for that amount to the electronic wallet of the sending customer; while observing the necessary measures to distinguish the type of operation on the payment system via mobile phones to indicate that it is an "outward international transfer rejection", and the possibility of linking the financial transaction related to rejecting the transfer request with the unique reference number of the financial transaction related to the main transfer request so that it can be tracked.

Figure No. (2): Executing Electronic Transfer via the Electronic Channels of the Exchange Company

Third: Procedures for Executing Inward Cross-Border Financial Remittances (Remittances Inward)

1. Receiving Outward Cross-Border Financial Remittances via the Electronic Wallet Application Directly:

a) Through this method, the receiving entity must initially receive the transfer request of the sending customer and the transfer received from outside from the issuing entity.