Palestine Compliance Report

Generated 2026-09-22

Framework In Development

Regulatory Overview

Regulatory Status: Active legislative/regulatory process underway
Key Regulator(s): Palestine Monetary Authority, Ministry of Justice, Palestinian Monetary Authority, Palestinian Tax Authority
Primary Legislation: crypto regulation, and subsequent amendments/regulations, Financial Monitoring Law No. 17 of 2007, Palestinian Financial Markets Law No. 19 of 2005, Palestinian Financial Monitoring Law No. 17 of 2007, Palestinian Tax Authority Income Tax Law (2021)
Travel Rule: Not adopted
Tax Reporting: PMA Position: The PMA has explicitly stated that it does not license or supervise any entities dealing with cryptocurrencies and has warned financial institutions against engaging in any transactions related to them. They emphasize the risks associated with price volatility, lack of regulatory oversight, potential for illicit activities, and the absence of an issuing authority.. No Specific Rates for Crypto: There are no specific capital gains tax rates for cryptocurrency in Palestine because cryptocurrencies are not recognized as legal assets for investment or trading.. General Capital Gains: Palestine has an Income Tax Law (e.g., Law No. 8 of 2011), which generally taxes income derived from various sources, including business activities and certain asset disposals. However, this legal framework does not apply to transactions involving banned digital assets.. No Specific Income Tax for Crypto: Similarly, there is no specific income tax treatment for income derived from cryptocurrency activities (e.g., mining, staking, trading profits) because the activities themselves are deemed illegal and outside the regulated financial system.. General Income Tax: Palestine levies income tax on individuals and corporations based on their income derived from sources within or deemed to be within Palestine. However, income from illegal activities is generally not declared for tax purposes and the state does not legitimize such income by providing a tax framework for it.

Key Facts

aml Measures to combat money laundering and terrorist financing in Palestine Minister of Economy and Tourism and Governor ... Palestinian Tax Authority guidelines on AML incentives (2023)
custody Palestinian Monetary Authority (PMA) — Established by Law No. 2 of 1997 (PMA Law), the PMA serves as the monetary authority and banking supervisor. The PMA has issued Circular No. 19/2017 regarding electronic banking activities but has not issued a specific circular dedicated solely to virtual assets. However, the PMA has cautioned banks against dealing in any form of digital assets lacking regulatory approval, citing requirements under the Palestinian Banking Law. Palestinian Capital Market Authority (PCMA) — Established pursuant to Decree Law No. 8 of 2007 regarding the regulation of securities markets. The PCMA does not have a specific regulatory framework for digital assets, and its focus has remained on traditional securities. Ministry of National Economy — Has oversight over corporate registration and economic activities but has not issued any binding guidance relevant to virtual asset custody. PMA Circulars: The PMA has issued a series of circulars addressing electronic money and payment services. While not explicitly addressing digital asset custody, these circulars have established what some legal analysts argue is a basis for oversight of non-bank financial activities. Palestinian Official Gazette: The legislative arm of the Palestinian government publishes all laws and regulations in the Official Gazette, which serves as the authoritative compilation of enforceable legal instruments. The PMA has issued Circular No. BD/141/2020 (a public caution) warning financial institutions against conducting any transactions involving cryptocurrencies and cautioning consumers against the risks of unlicensed digital asset activities. This circular confirms the PMA's view that digital asset activities are not regulated and thus unauthorized. The PMA's "Banking Supervision Manual" (2021 revision) reiterates that any entity providing financial services must be licensed and requires banks to obtain prior approval before introducing any new financial product, which digital asset custody would fall under absent an exemption. The PMA has not issued any regulation or circular outlining a licensing process for virtual asset custodians. Banking Law No. 9 of 2010 applies to banks and financial institutions, but does not establish a custodian-specific licensing regime for digital assets.
enforcement Regulator Name: Palestinian Monetary Authority (PMA) Entity Targeted: All financial institutions under PMA supervision, and by extension, the general public within its jurisdiction. Violation Type: Dealing in cryptocurrencies. The PMA considers cryptocurrencies to be highly volatile, prone to speculative risks, lacking legal tender status, and a tool for money laundering and terrorism financing. Penalty Amount: No specific penalty amount against an individual entity has been publicly announced by the PMA for crypto dealing. The implication is that financial institutions dealing in crypto would face regulatory sanctions (e.g., license revocation, operational restrictions) from the PMA. Individuals could face legal consequences under local laws. Date: The PMA first issued a warning against dealing in cryptocurrencies in 2018 and has reiterated its prohibition multiple times, including within the last three years. For instance, statements reiterating caution or prohibition have been reported in 2021. Outcome: Cryptocurrencies are not recognized as legal tender in Palestine, and licensed financial institutions are explicitly prohibited from dealing in them. This discourages official adoption and pushes any activity underground. While a direct, recent PMA press release explicitly reiterating a new enforcement action is hard to find, consistent news reporting confirms the ongoing prohibition: Palestinian Authority Warns Against Dealing in Cryptocurrencies: https://english.wafa.ps/Pages/Details/102924 (This article is from 2018, but the stance remains unchanged and is the foundational regulatory position.) Local news references often confirm the PMA's consistent stance: Search for "Palestinian Monetary Authority cryptocurrency" for ongoing mentions of their prohibition. Regulator Name: U.S. Department of the Treasury, Office of Foreign Assets Control (OFAC)
licensing No specific licensing framework: There are no dedicated laws, regulations, or licensing procedures specifically for cryptocurrency exchanges, custody providers, or payment processors in Palestine. Discouragement/Prohibition: The PMA views cryptocurrencies as high-risk, speculative, lacking legal tender status, and outside the regulated financial system. Financial institutions under PMA supervision are generally discouraged or implicitly prohibited from dealing with them. Exchanges: Not licensed. Any attempt to operate a cryptocurrency exchange legally would likely face significant hurdles due to the lack of a regulatory framework and the PMA's stance. Custody Providers: Not licensed. Payment Processors (dealing with crypto): Not licensed. Traditional payment processors are regulated by the PMA, but this framework does not extend to processing payments directly in cryptocurrencies. Neither exists for crypto specifically. Palestine does not have a "registration regime" or a "licensing regime" for virtual assets or VASPs. The de facto regime is one of caution and unofficial prohibition for regulated entities. Capital: No specified capital requirements for crypto firms. AML/KYC: Palestine has general Anti-Money Laundering and Counter-Terrorist Financing (AML/CFT) laws and regulations that apply to traditional financial institutions. However, because there's no framework for crypto, these laws are not specifically tailored or applied to crypto service providers in a licensing context. Any entity operating would still be subject to general business registration and potential scrutiny under existing AML/CFT laws if they are found to be facilitating illicit activities.
sanctions Risk-Based Approach: VASPs must assess the sanctions risk associated with their operations, customers, and transactions. Given the geopolitical complexities and the presence of designated terrorist organizations in the Palestinian territories, transactions involving individuals or entities in Palestine are generally considered higher risk. Customer Due Diligence (CDD) / Enhanced Due Diligence (EDD): Collect and verify identity information of all customers, including beneficial owners. For high-risk jurisdictions or entities, EDD measures are crucial. Sanctioned Entity Screening: Screen all customers, beneficial owners, and transaction counterparties against relevant sanctions lists. Geographic Screening: Identify transactions originating from, destined for, or involving sanctioned jurisdictions (though Palestine itself isn't a sanctioned jurisdiction, entities/individuals within it may be). Transaction Monitoring: Implement systems to monitor transactions for red flags indicative of sanctions evasion or illicit finance. Reporting Obligations: Report blocked property, rejected transactions, or suspicious activities to relevant authorities. Prohibited Transactions: Do not engage in any transactions or provide services to sanctioned individuals, entities, or jurisdictions. Terrorism Sanctions Programs: OFAC maintains robust sanctions programs targeting global terrorism, which are highly relevant to the Palestinian territories due to the presence of designated Foreign Terrorist Organizations (FTOs) and Specially Designated Global Terrorists (SDGTs).
securities The Palestinian Authority has begun to outline a regulatory framework for cryptocurrencies and digital assets, focusing on licensing, AML/KYC compliance, and enforcement mechanisms. The regulatory environment for cryptocurrencies in Palestine is evolving, with the Palestinian Capital Market Authority (PCMA) playing a pivotal role in establishing standards. To operate legally, cryptocurrency businesses must obtain licenses from the PCMA, ensuring compliance with local financial regulations and market integrity. Anti-Money Laundering (AML) and Know Your Customer (KYC) protocols are mandatory for all digital asset service providers in Palestine, aligning with international standards. The PCMA has the authority to impose penalties, including fines and license suspensions, for non-compliance with AML/KYC and licensing requirements. Cryptocurrency transactions are subject to taxation under Palestinian finance law, with specific guidelines for reporting and tax obligations. Current regulatory gaps include the lack of comprehensive digital asset-specific legislation and potential risks related to market volatility and international sanctions compliance. IFC DIGITAL SCOPING COUNTRY REPORT: PALESTINE Margarete Biallas
stablecoin The Palestine Monetary Authority (PMA) is the central financial regulatory body in Palestine; no PMA-issued regulations or statements regarding stablecoins or virtual assets have been published. Hong Kong Monetary Authority - Regulatory Regime for Stablecoin Issuers Palestine is not a FATF member and has no reported Moneyval or FATF-style mutual evaluation status. Hong Kong Monetary Authority - Regulatory Regime for Stablecoin Issuers No primary legislation, law number, or official instrument number relating to stablecoin or virtual asset regulation in Palestine has been published. Hong Kong Monetary Authority - Regulatory Regime for Stablecoin Issuers No reference to any Palestinian regulatory body, law, or policy document addressing digital assets has been published. Hong Kong Monetary Authority - Regulatory Regime for Stablecoin Issuers No licensing regime for stablecoin issuers or virtual asset service providers exists in Palestine. Hong Kong Monetary Authority - Regulatory Regime for Stablecoin Issuers No authority in Palestine has published licensing criteria, capital requirements, application procedures, or timelines for stablecoin-related activities. Hong Kong Monetary Authority - Regulatory Regime for Stablecoin Issuers Zero entities have been licensed in Palestine to issue stablecoins or conduct virtual asset business — no register of licensed entities exists. Hong Kong Monetary Authority - Regulatory Regime for Stablecoin Issuers No AML/KYC requirements specific to stablecoin issuers or virtual asset service providers have been published by any Palestinian authority. Hong Kong Monetary Authority - Regulatory Regime for Stablecoin Issuers
status Financial Monitoring Unit (FMU) – Part of the Palestinian Authority Ministry of Finance, responsible for monitoring financial transactions to prevent money laundering and terrorist financing. Palestinian Securities Authority (PSA) – Oversees securities markets and may indirectly influence digital asset activities through existing market regulation. International Standing – Palestine is a member of the Financial Action Task Force (FATF) and adheres to its 40 Recommendations, though specific guidance for virtual assets remains under the broader AML/CFT framework. Financial Monitoring Law No. 17 of 2007 – Governs the identification, reporting, and monitoring of suspicious financial transactions. Article 2 defines “financial institutions” broadly, potentially covering crypto exchanges if classified as such. Anti‑Money Laundering (AML) Regulations – Issued by the FMU, these regulations align with FATF standards but do not explicitly name cryptocurrencies. Palestinian Financial Markets Law No. 19 of 2005 – Regulates securities and may indirectly affect tokenized securities or Initial Coin Offerings (ICOs) if classified as securities. Virtual Asset Service Providers (VASPs) such as exchanges, wallet services, and ICO issuers are not explicitly licensed by the PA. However, under the Financial Monitoring Law, any entity facilitating the exchange of virtual assets for fiat or other virtual assets may be considered a “financial institution” and thus subject to registration with the FMU. Capital Requirements: No specific monetary thresholds are stipulated in PA law for crypto licensing; however, the FMU may require proof of sufficient capital to operate responsibly, typically assessed on a case‑by‑case basis.
tax PMA Position: The PMA has explicitly stated that it does not license or supervise any entities dealing with cryptocurrencies and has warned financial institutions against engaging in any transactions related to them. They emphasize the risks associated with price volatility, lack of regulatory oversight, potential for illicit activities, and the absence of an issuing authority. No Specific Rates for Crypto: There are no specific capital gains tax rates for cryptocurrency in Palestine because cryptocurrencies are not recognized as legal assets for investment or trading. General Capital Gains: Palestine has an Income Tax Law (e.g., Law No. 8 of 2011), which generally taxes income derived from various sources, including business activities and certain asset disposals. However, this legal framework does not apply to transactions involving banned digital assets. No Specific Income Tax for Crypto: Similarly, there is no specific income tax treatment for income derived from cryptocurrency activities (e.g., mining, staking, trading profits) because the activities themselves are deemed illegal and outside the regulated financial system. General Income Tax: Palestine levies income tax on individuals and corporations based on their income derived from sources within or deemed to be within Palestine. However, income from illegal activities is generally not declared for tax purposes and the state does not legitimize such income by providing a tax framework for it. No Specific VAT for Crypto: Palestine has a Value Added Tax (VAT) system (known as General Sales Tax / VAT Law No. 9 of 2011). However, there is no specific VAT treatment for cryptocurrency transactions. Since cryptocurrencies are not recognized as goods, services, or legitimate financial instruments, VAT does not apply to their buying, selling, or use. None for Crypto: There are no specific tax reporting requirements for individuals or businesses related to cryptocurrency holdings or transactions, precisely because these assets and activities are not recognized and are considered illegal by the financial authorities. General Reporting: Individuals and businesses are subject to general income tax and VAT reporting requirements for legitimate income and taxable supplies/services, but these do not extend to cryptocurrency.
travel rule No, not directly. Palestine, under the guidance of the Palestinian Monetary Authority (PMA), has not adopted specific legislation to implement the FATF Travel Rule for a licensed VASP sector. This is because the PMA has generally prohibited or strongly warned against dealing in virtual assets. The PMA's stance aligns with efforts to protect the financial system from unregulated activities, money laundering, and terrorist financing risks, consistent with FATF recommendations generally, but it achieves this by largely banning the underlying activity rather than regulating it. Palestine is observed by the MENAFATF (Middle East and North Africa Financial Action Task Force), a FATF-style regional body. MENAFATF mutual evaluation reports consistently highlight Palestine's efforts to address AML/CFT risks, but also note the challenges in areas like virtual assets due to the prevailing prohibitive stance. N/A. As there is no specific regulatory framework for licensed VASPs, there is no effective date for the Travel Rule's implementation. N/A. Since there's no framework for regulated VASP transactions, there are no defined threshold amounts for the Travel Rule. N/A. The PMA does not license or regulate VASPs to operate in Palestine. Any entities attempting to offer VASP-like services would likely be operating outside the legal framework. N/A. Without a regulated VASP sector and specific legislation, there are no defined technical implementation requirements for the Travel Rule. While there are no penalties for "non-compliance with the Travel Rule" specifically, engaging in virtual asset activities in Palestine can expose individuals and entities to penalties under existing financial and banking laws for operating an unlicensed financial service, dealing in prohibited financial instruments, or engaging in activities deemed high-risk by the PMA.

Sources

This report is AI-generated from publicly available regulatory sources. Last updated: 2026-09-09. View full profile