Financial Crime World

Banking Regulations and Compliance in Israel: A Regulatory Overview

In a rapidly changing regulatory landscape, financial institutions in Israel must navigate complex compliance requirements to ensure they remain compliant with local laws and regulations. This article provides an overview of the key regulatory bodies, compliance steps, and considerations for financial institutions operating in Israel.

Regulatory Bodies in Israel

Unlike other countries, the Financial Services industry in Israel is not governed by a single regulator. Instead, it falls under the purview of several regulatory bodies, including:

  • Bank of Israel: responsible for regulating banks and financial institutions
  • Israeli Securities Authority: regulates securities trading and markets
  • Israeli Insurance Authority: regulates insurance companies

Compliance Steps

To better understand their compliance needs, financial institutions can take the following steps:

  • Develop an operational risk management framework that integrates with overall management processes
  • Perform a risk assessment before engaging a provider and periodically thereafter
  • Review AWS’ Shared Responsibility Model to map responsibilities for each service used
  • Assess control responsibilities using AWS Artifact

Data Protection, Privacy, and Residency

Financial institutions in Israel must comply with the following regulations:

  • Israeli Privacy Protection Law, 5741-1981: governs data protection and privacy
  • Guidelines No. 2/2011 on outsourcing personal information processing: provides guidelines for outsourcing personal information processing

Additionally, financial institutions must consider the following when transferring data:

  • Data Transfer Regulations: allow for data to be transferred and stored in regions where there is equal or more stringent data protection regulations
  • Prohibition of onward transfer: prohibits onward transfer of personal data by the original foreign recipient

New Region Launch

AWS has announced the launch of its new region in Tel Aviv, which will give customers in Israel the ability to run workloads and store data that must meet low latency or data processing requirements. The new region will feature three Availability Zones.

Additional Resources

For more information on banking regulations and compliance in Israel, financial institutions can contact their account representative or AWS directly. Additional resources are available online, including:

  • AWS Operational Resilience in Financial Services Guide
  • AWS Policy Perspective: Data Residency
  • Financial Services Lens - AWS Well Architected Framework

Disclaimer

This article is provided for informational purposes only and does not create any warranties, representations, contractual commitments, conditions, or assurances from AWS or its affiliates. The responsibilities and liabilities of AWS to its customers are controlled by AWS agreements, and this document is not part of nor does it modify any agreement between AWS and its customers.