Anti-Money Laundering and Terrorist Financing

The PCMA aims to initialize the appropriate climate to achieve stability and growth of capital, to regulate, develop and monitor the capital market in Palestine, and to protect the rights of investors, in view of its responsibilities and objectives aiming at achieve stability in the capital market, and in order to prevent the capital market sectors from the risks of money laundering and terrorist financing activities, which may threaten the continuation of these sectors and expose them to financial, operational, legal and other risks. As of the beginning of 2021, the PCMA continued its role in harmonizing compliance in implementing the national strategy to combat money laundering and terrorist financing, as follows:

• In compliance with Instructions 4 of 2016, a Zoom meeting was held on 11/1/2021 with all the auditors contracting with companies subject to the monitoring and supervision of the PCMA discussing (PCMA AML suggested procedures) the audit procedures required by the auditor and to provide the PCMA with a report before 31/8/2021, and the sectors subject to the monitoring and supervision of the PCMA were informed of these procedures and a circular was issued accordingly.
• Meetings were held with the communication officials of the securities companies and stock exchange whereby the inspection reports for the year 2020 were discussed. These meetings aimed to review and discuss the system to reduce the risks of combating money laundering and terrorist financing.
• All insurance companies were visited and meetings were held with their contact persons to oversee the companies’ procedures in facing the risks of money laundering and terrorist financing. A circular was sent to all companies regarding the loopholes they have.
• A tool has been developed that will help companies conduct a self-assessment of money laundering and terrorist financing risks and develop procedures to reduce these risks and identify their weaknesses.
• All reports of the external auditors for all sectors were reviewed and letters were sent out to provide the PCMA with rectification plans during the first quarter of 2022.

Issuance of Instructions and Circulars:

The Circulars issued by the PCMA aims to increase efficiency and enhance the ability of companies to confront the risks of money laundering and terrorist financing and take a risk-based approach in detecting suspicious transactions. Several circulars were issued in the first half of 2021, as follows:

• Circular regarding sending an annual report on all activities related to combating money laundering.
• External auditor Circular.
• Internal auditor Circular.
• Circular regarding the resolutions issued by the UN Security Council, which totalled 7.
• Circular regarding high-risk countries that are prohibited to deal with, which were published on the PCMA’s website.
• Circular regarding self-assessment tool.
• Circular regarding raising the efficiency of insurance companies.
• Circular regarding patterns and trends money laundering report.
• Circular regarding the registration on the GOAML program.

Specialized inspection tours and preparation of risk records:

• Since the beginning of 2021 and according to the risk-based plan, the General Administration of Securities has completed 10 inspection rounds on all securities companies and the Stock Exchange. A tool was developed to helps the inspection team examine the controls of companies and build (RISK PROFILE) for each company separately. The results of the companies’ risk rating were 3 high-risk companies, 3 medium-risk companies, and 3 low-risk companies.
• The General Administration of Financial Leasing represented by its Monitoring and Inspection Department, in cooperation with the Anti-Money Laundering and Terrorist Financing Department, has completed 5 specialized inspection rounds, and more work is underway during this year.
• The Anti-Money Laundering and Terrorist Financing Section visited all insurance companies and met with their contact officials in order to follow up their plans to rectify their business outlining the gaps that still exist. A circular was issued on 22/4/2021 to raise the efficiency of the insurance sector and rectify the current gaps.

Suspicion cases:

Four reports were produced, two of which relating to the insurance sector, one to the financial leasing sector and one to the General Administration of Securities. The Financial Follow-up Unit was notified through the (GOAML) system accordingly and was provided with all documents and the PCMA responded to all inquiries related to the suspicious request. The PCMA is awaiting the results of the report.

Specialized inspection tours upon request of the Financial Follow-up Unit:

• The General Administration of Securities has assigned two inspection rounds at the request of the Financial Follow-up Unit in 2021, which aim to identify and verify companies’ procedures in dealing with clients after submitting suspicious reports against such companies.

Administrative Violations and Penalties:

• The PCMA’s Board of Directors imposed a second-degree penalty of (10,000) ten thousand Jordanian Dinars as a fine against Al Hadaf Jordan and Palestine Securities Company.
• The Board of Directors of the PCMA decided to suspend trading of the securities of Al-Ahlia Insurance Group Company due to non-compliance with disclosure and financial statements.
• The General Department of Insurance issued a written warning to Al-Ahlia Insurance Group Company for not complying with Instructions No. 4 of 2020.
• The General Department of Insurance issued a warning to both Al-Ahlia Insurance Group Company and the National Insurance Company for not providing the PCMA with the report of the external auditor in accordance with the circular issued by the PCMA, granting them a last chance to provide such report.
• The General Administration of Securities has alerted both the United and Al-Wasata Securities companies for non-compliance with Instructions No. 4 of 2016 regarding combating money laundering and terrorist financing.
• The General Administration of Financial Leasing and Mortgage did not renew the license of Good Luck for Financial Leasing Company for non-compliance with the instructions of financial leasing as well as Instructions No. 4 of 2016 regarding combating money laundering and terrorist financing.

Referral to the Public Prosecution:

A file was referred to the Public Prosecution for violating the provisions of Insurance Law No. 20 of 2005, as amended, and for practicing the work of an insurance agent without a license.

Participation in conferences, workshops and training programs:

• 21 PCMA employees participated in the program (Financial Crimes in the Insurance Sector) with the Emirates Insurance Authority.
• 13 PCMA employees participated in the program (Trading in the Currency, Metals and Commodities Exchange) with the Palestinian Banking Institute.
• 10 PCMA employees participated in the program (factoring (legislative and technical framework)) with the Egyptian Financial Services Institute / affiliated to the Egyptian Financial Supervisory Authority.
• PCMA employees participated in the program (Insurance Companies Governance and Combating Financial Crimes) with the Arab Monetary Fund.
• PCMA employees participated in the “Capital Markets International Trends and Developments” program with the Federation of Arab Securities Authorities.
• PCMA employees participated in the program (Anti-money laundering and terrorist financing system) with the Arab Monetary Fund.

Highlighting the PCMA locally and enhancing its regional and international presence:

Due to the prevailing circumstances, the PCMA has not participated in combating money laundering and terrorist financing crimes in a face-to-face manner, but all participations were made through Zoom meetings.

Local and International Cooperation:

Request for local cooperation received from the competent authorities:

• The PCMA received ten letters from the Corruption Court relating to lifting confidentiality, all of which were responded to.
• The PCMA received ten letters from the Financial Follow-up Unit requesting information, all of which were responded to.

Request for local cooperation issued to the competent authorities:

• Based on suspicious cases, the General Department of Insurance sent requests for assistance to the Financial Follow-up Unit to gather data and information from the State of Qatar.

Outgoing request for international cooperation:

Based on suspicious cases, the PCMA has passed international cooperation requests through the Palestinian Financial Follow-up Unit to the State of Qatar, and the no response was received to date.

An overview of the most important statistics of 2021:

Risk Management Department – Risk Management Section:

The PCMA’s risk management framework provides its overall intent and direction in terms of risk management, in addition to providing the procedures and the arrangements for implementing and continuously improving risk management in line with the context of risk management. The PCMA’s risk management framework basic elements include contextualization and acceptance of risk taking, risk assessment (identification, analysis and assessment), risk handling, information and communication, awareness, training, monitoring, follow-up and review of risks. The Risk Management Section has been created within the Risk Management Department and it is responsible for managing risks within the PCMA in line with the administrative units.

Among the most prominent results of the Risk Management Department until the first half of 2021:

• Adopting work procedures that clarify the workflow of the Risk Management Department.
• Work is underway to adopt a risk management framework in the PCMA.
• Work is underway to create a risk register and hold a meeting with the administrative units within the PCMA.