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ISA Proposes Stricter Capital Requirements for Payment Companies
The Israeli Securities Authority (ISA) has released a draft proposal outlining stricter capital requirements for payment companies operating in Israel. The proposed regulations aim to enhance the financial stability of these companies, safeguard customer funds, and reduce the risk of financial harm.
Higher Capital Requirements
Under the proposed regulations, payment companies will need to hold higher levels of capital to cover potential risks and losses. This includes maintaining minimum levels of cash reserves, as well as ensuring adequate liquidity to meet customer demand for withdrawals.
- The ISA estimates that this increased regulatory scrutiny will lead to a more robust financial foundation for these companies.
- Payment companies will need to maintain minimum levels of capital and liquidity to ensure they can withstand potential losses or unexpected fluctuations in their customers’ funds.
Enhanced Customer Protection
The proposed regulations also place greater emphasis on protecting customers’ funds. Payment companies will be required to implement robust systems for safeguarding customer funds, including:
- Regular deposits
- Comprehensive policies
- Senior officers responsible for compliance
In addition, the ISA has introduced stricter rules governing transactions in closed and semi-closed systems, as well as less stringent identification procedures for low-risk payment initiation services.
Foreign Corporations’ Access to Israeli Financial Systems
The proposal also addresses the issue of foreign corporations seeking to access Israel’s financial systems. The ISA has announced that it will grant exemptions from licensing requirements to foreign payment service providers from recognized countries (the EU, UK, or USA) provided they meet certain conditions.
Fees and Regulations
The ISA has also approved draft fee regulations, which will impose fees on payment service licensees and applicants. These fees aim to cover the regulator’s supervision costs, with rates dependent on the volume and type of activity requested.
Public Comment and Final Decision
The proposed regulations are now open for public comment, with a final decision expected in the coming months. The Israeli Securities Authority has invited stakeholders to provide feedback and suggestions on the draft proposal.
Expert Guidance
For companies seeking guidance on the new regulation, Barnea Jaffa Lande’s Regulation Department, led by Partner Anat Even-Chen, is available to answer questions and provide expert counsel.