Israel Starts AML Licensing Countdown for Gemach Financial Institutions
Capital Market Supervisor Amit Gal issued an official notice beginning the licensing of Gemach institutions under the Anti-Money Laundering Law, starting a 24-month compliance countdown.
The Supervisor of Capital Markets, Amit Gal, published an official notice regarding the beginning of the issuance of licenses under the Gemach Law. This step establishes the legal anchor determining the entry into force of the anti-money laundering order in the sector, effectively starting the countdown for the implementation of regulatory duties.
Regulation of Community Financial Institutions
Gemach institutions operate as small community banks, functioning on a non-profit basis and providing deposit and interest-free credit services. These bodies manage billions of shekels originating from deposits, loans, and donations, having operated for many years without organized supervision, which created significant exposure to anti-money laundering risks. The Gemach Law was designed to regulate the sector and subject it to international standards (FATF), but its full implementation was delayed until the enactment of a dedicated anti-money laundering order.
Transition Period and Regulatory Compliance
Section 20 of the order sets a transition and preparation period of 24 months. The legislation determined that the countdown would be conditioned on a formal legal step: publishing an official notice in "Reshumot", the official gazette of the state. Following the publication, licensed Gemachs will be required to implement structured risk management systems, appoint compliance officers, and conduct enhanced Know Your Customer (KYC) procedures.
The Capital Market Authority updated that the number of licenses granted to institutions meeting regulatory conditions has risen to 19, while enforcement steps have been initiated against non-compliant bodies.
