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Israel’s Banking Regulations: What You Need to Know

Israel’s banking regulations are designed to promote healthy competition and efficient oversight of the financial services sector.

The Law on Supervision of Financial Services (Regulated Financial Services), 2016

The law regulates credit service providers, financial asset service providers, peer-to-peer lending platforms, deposit and credit services associations, and other financial institutions. At the helm of these regulations is the Insurance and Savings Capital Market Authority Commissioner, who ensures that financial service providers meet specific requirements to obtain a license.

Requirements for Obtaining a License

To obtain a license, financial service providers must:

  • Meet a minimum equity requirement ranging from half a million NIS to four million NIS, depending on the type of license.
  • Undergo evaluation of their honesty and integrity, as well as assessment of the competence of officers, controlling shareholders, and interested parties involved.
  • Obtain permits for interested parties and controlling shareholders to hold and maintain shares or means of control.

Responsibilities of Licensed Financial Institutions

License holders must:

  • Demonstrate sufficient financial means.
  • Provide a business plan or activity document, depending on the license type.
  • Avoid providing misleading information in advertising.
  • Extend disclosure of all transaction details.
  • Submit periodic reports to the Capital Market Authority.

Consequences of Non-Compliance

Violations of the Law can result in:

  • Criminal penalties.
  • Financial sanctions.
  • Class-action lawsuits for consumers.

To avoid such consequences, financial service providers must abide by all provisions of the Law and supervisor’s instructions.

Updated Procedure for Submitting Applications for Financial Services Licenses

In November 2019, the Capital Market Authority published an updated procedure for submitting applications for financial services licenses. The new procedure outlines requirements such as:

  • Policies to support activities.
  • Examination of organizational structure.
  • Business plans.
  • Financial stability.

Our Expertise in Helping Financial Institutions Navigate Regulations

Our office specializes in helping financial institutions navigate these regulations, providing assistance with:

  • License applications.
  • Training.
  • Document preparation.
  • Compliance with consumer protection laws.

For more information or guidance, contact our partners specializing in financial regulation.