Draft Directive for Payment Companies on Management of Money Laundering, Terror Financing and Proliferation Financing Risks

On June 10, 2026, the Israel Securities Authority (ISA) published a draft directive for payment companies on management of money laundering, terror financing and proliferation financing risks, for public comments (the “Draft Directive” or the “Draft“).

The Draft Directive specifies the manner in which a payment company is required to implement the obligations applicable to it under the Prohibition of Money Laundering Order (Duties of Identification, Reporting, and Record Keeping by Payment Companies for the Prevention of Money Laundering and Terror Financing), 5784-2024 (the “Order“) with respect to management of money laundering risks, terror financing, and the financing of weapons of mass destruction, while adopting a risk-based approach. The adoption of this approach requires payment companies to identify, assess, and understand the risks of money laundering and terror financing to which they are exposed, and to take measures to reduce the risks effectively and by allocating resources in accordance with the level of risk identified.

The Draft includes provisions regarding risk management in this field and the implementation of the relevant obligations, including the following:

• Money Laundering and Terror Financing Risk Management Policy;
• The responsibilities and roles of the Board of Directors in this regard;
• Appointment of an AML/CTF Compliance Officer, including provisions regarding the status, qualifications, duties, and other matters relating to such office holder;
• The duty of internal audit;
• Identifying and assessing the risks of money laundering and terror financing, including the requirement to formulate a risk assessment document;
• Risk management measures, including: provisions regarding the KYC procedure; the management of service recipients classified as high-risk or low-risk for money laundering and terror financing; provisions regarding electronic transfers; control requirements (including ongoing and increased controls); record keeping and retention requirements; provisions in the field of terror financing and proliferation; provisions regarding the establishment of procedures for reporting to the Money Laundering and Terrorist Financing Prohibition Authority, as well as the submission of reports to the Israel Securities Authority upon the occurrence of certain events; provisions regarding the recruitment and training of employees; provisions regarding at-risk activity (including required conduct with the involvement of public officials or aggregators); group risk management and more.

Please note that the effective date of the Directive (as set forth in the Draft) will be 60 days from the date of its publication.

The Draft Directive includes a wide range of substantive provisions, and we recommend that it be reviewed carefully. The above overview is general in nature, provided for convenience only, and does not purport to exhaust all provisions of the Draft Directive.

Comments and responses to the Draft may be submitted to the Israel Securities Authority until July 12, 2026.

We will be happy to be at your disposal to provide clarifications and examine the implications of the Draft for your activity, as well as to assist in providing comments on it.

For the Draft [click here]