New Israeli Draft Bill Seeks to Expand Control of Dual-Use Exports and Strengthen Regulatory Enforcement over Israeli Companies

In March 2026, the Ministry of Economy and Industry published a draft bill entitled Foreign Trade Regulation Law: Control of Dual-Use Exports (Civilian and Nuclear, Biological, Chemical), 2026. The bill seeks to replace the existing regime of regulatory control based on two orders—the Import and Export Order (Control of Dual-Use Goods, Services and Technology Exports) and the Import and Export Order (Control of Nuclear, Biological and Chemical Exports)—with broader and more detailed primary legislation. The goal is to establish a more effective and advanced regulatory control regime.

If the proposed Foreign Trade Regulation Law is ultimately enacted, many companies—particularly Israeli companies exporting diverse products and services, including technology, hardware, software, or R&D-based companies—may find themselves subject to an export control regime that imposes broader and more stringent regulatory enforcement.

Expanded Application: Not Just “Classic” Physical Exports

The draft bill proposes controls that extend beyond physical shipments of exports to include electronic transfers of software and technology and certain transfers within Israel to foreign entities. In some cases, this also includes brokerage, the provision of technical assistance, and transshipments of goods through Israel enroute to another destination.

This means that companies that do not currently consider themselves “classic exporters” may have to re-examine whether their activities require licensing. Companies already operating under the existing regulatory orders may need to examine the applicability of the proposed legislation, the types of activities requiring licensing, and whether their internal compliance procedures should be revised to comply with a broader and more detailed export control regime.

Catch-All Mechanism: Exports of Dual-Use Items Not Appearing in the Lists May Also Require Licensing

One of the draft bill’s key changes is the catch-all mechanism, which could also impose a licensing obligation on exports of dual-use items not appearing in the lists of controlled items in the event of suspected prohibited use, such as in relation to chemical, biological, or nuclear weapons, terrorism, sanctions violations, or sanctions evasion.

The catch-all mechanism empowers competent authorities to impose licensing obligations on exporters even for transactions or items not appearing on the lists of items requiring a license. Moreover, liability is not triggered solely after an exporter is issued such notice: if an exporter suspects (or should have suspected under the circumstances) prohibited use, it must suspend the transaction pending clarification from the relevant authority and comply with the statutory requirements.

In other words, the draft bill proposes to broaden the obligations imposed on exporters beyond checking whether items appear in the regulatory lists and to obligate companies to perform substantive examinations of export transactions, including the parties involved, the end users, the expected end use, the destination country, sanctions lists, and the circumstances of the transaction.

If the Foreign Trade Law is ultimately enacted, these substantive due diligence examinations of export transactions are expected to become a key component of foreign trade processes, even when items are not explicitly classified as subject to regulatory control.

Higher Exposure to Regulatory Enforcement, Fines, and Personal Liability

The draft bill proposes granting regulatory authorities broad control powers, imposing document-retention and reporting obligations, significant monetary penalties, and even criminal liability.

According to the proposed wording, regulatory authorities will be authorized to impose monetary penalties as follows:

• For particular violations – ILS 200,000 on an individual and ILS 400,000 on a corporation.
• For more serious violations, including unlicensed exports, brokerage or technical assistance, or licensing violations – ILS 1,000,000 on an individual and ILS 2,000,000 on a corporation.
• For egregious violations, such as exporting after being refused a license or using a fictitious license – ILS 1,500,000 on an individual and ILS 3,000,000 on a corporation.

The draft bill also proposes imposing personal liability on corporate officers and obligating companies to implement internal control and compliance mechanisms. For management members, directors, compliance officers, and in-house general counsels, this is one of the most material aspects of the proposed legislation.

In other words, regulatory exposure is no longer limited to the question of whether or not a license is required, but rather encompasses how exporters manage internal control, classification, documentation, reporting, and other related processes.

Proposed Flexibility and Streamlining Processes

The draft bill does not focus solely on imposing a stricter regulatory framework. It also proposes to expand licensing tracks, enable particular exemptions, and set fixed timetables for responding to license applications. However, a significant portion of the proposed regulatory relief depends on lists, criteria, and arrangements to be decided later. Therefore, although the intentions are evident, actual regulatory relief remains partial at this stage.

The proposed legislation may ultimately improve licensing flexibility, but it may also considerably expand the types of companies obligated to ascertain whether their export activities are subject to the new legislation, implement internal controls, and prepare for audits and regulatory enforcement measures.

Practical Implications and Recommendations

The draft bill proposes a broader, more advanced, and enforceable regulatory regime that extends far beyond exports of physical goods.

Therefore, we recommend that exporters of products with dual-use potential and organizations engaging in the development, marketing, sale, or provision of services in Israel or abroad in relation to controlled dual-use items—or items that could be considered uncontrolled dual-use items—analyze the potential implications of the proposed legislation and begin taking preparatory measures accordingly.

At this stage, we recommend focusing on the following measures:

• Map relevant activities, products, software, technology, and services that may be subject to regulatory control.
• Check whether you need to add procedures for classifying products and services, conducting more comprehensive due diligence on transactions involving end-users and end-use requirements, and strengthening internal compliance.
• Assess whether existing agreements and processes fulfill the expected requirements.
• Conduct due diligence on your export activities and consider whether you need to refer to the relevant regulatory authority or submit comments about the draft bill, particularly for issues of applicability, regulatory certainty, extent of the reporting obligation, and the practical applicability of the compliance requirements.
• Implement or reinforce internal compliance mechanisms, including in relation to due diligence reviews of transactions, documentation, and employee training procedures for the purposes of minimizing exposure to personal liability.

Please note: if you are considering contacting the relevant regulatory authority or submitting comments on the draft bill, the deadline for doing so is April 25, 2026.

To view the draft bill, click here (in Hebrew).

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Adv. Noy Zilberman is an associate in our Regulation Department.

Barnea Jaffa Lande’s Regulation Department is one of the leading practices in its field in Israel. The team provides comprehensive advice across a range of regulatory issues relevant to our clients’ business activities. We support local and international corporations, investment funds, financial institutions, technology companies, and industrial companies in contending with complex and evolving regulation.