Israel Sets Official Date for Anti-Money Laundering Rules on Non-Profit Lenders
Translated & summarized from Calcalist by baba
Israel's Supervisor of the Capital Markets, Amit Gal, has announced the official start of license issuance for Gemachs, non-profit loan organizations, triggering a 24-month countdown to full anti-money laundering regulation. These institutions, which manage billions of shekels, have operated without formal oversight for years, posing money laundering risks. The new rules require risk management systems, compliance officers, enhanced customer identification, and direct reporting to authorities. As of now, 19 licenses have been granted, and enforcement actions are underway against non-compliant Gemachs.
The story in 6 lines · by baba
- Israel has officially begun the process of licensing non-profit loan organizations, known as Gemachs.
- A 24-month transition period for Gemachs to comply with anti-money laundering regulations has now started.
- Gemachs manage billions of shekels and previously operated without formal oversight, creating money laundering risks.
- New regulations will require Gemachs to implement risk management, appoint compliance officers, and enhance customer identification.
- Nineteen Gemachs have already received licenses, with more applications pending review.
- Enforcement actions have commenced against Gemachs not adhering to the new legal requirements.
Israel has officially set the start date for implementing anti-money laundering regulations on Gemachs, non-profit community loan organizations. Amit Gal, the Supervisor of the Capital Markets, announced the commencement of license issuance for these institutions, marking the legal anchor for the anti-money laundering order to take effect. Gemachs operate like small, non-profit community banks, providing interest-free loans and deposits, and manage billions of shekels from donations and deposits. For years, they operated without formal oversight, creating significant exposure to money laundering risks.
The Gemachs Law aims to bring these organizations in line with international anti-money laundering standards, but its full implementation was delayed until a specific order and licensing process were established. A key provision, Section 20 of the order, granted a 24-month transition period for Gemachs to adapt to new, complex regulatory requirements. This transition period's start was contingent on a formal legal step: the publication of an announcement in "Reshumot," Israel's official gazette, regarding the beginning of license issuance.
Confusion arose recently when the Capital Markets Authority issued the first seven licenses in September 2026, leading many to believe the 24-month period had begun. However, the law specifies that the clock starts only upon the official publication in "Reshumot." With the announcement now made, the 24-month countdown begins today, meaning the full regulatory obligations will take effect in two years.
Upon the deadline, licensed Gemachs will be required to implement risk management systems. This includes appointing a compliance officer for anti-money laundering duties, conducting enhanced Know Your Customer (KYC) procedures for public officials and high-risk clients, and preventing service to unauthorized entities. They will also need to adopt a computerized annual reporting system directly to the Capital Markets Authority and the Israel Money Laundering and Terror Financing Prohibition Authority.
The Capital Markets Authority also updated that since the order's installation in September, the number of licenses granted has risen to 19, with more applications under review. Concurrently, enforcement actions have begun against non-compliant entities, with warning letters issued to those violating the law and licensing procedures.
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