Clients updates / International Law

Following the Financial Action Task Force’s announcements, the Israel Money Laundering and Terror Financing Prohibition Authority published a list of countries and jurisdictions at high risk of money laundering, terror financing, and proliferation financing.

The United States, the European Union, and other countries have been imposing economic sanctions on Israel for quite some time. The recent sanctions imposed on Israeli settlers suspected or convicted of committing violence against Palestinians may be a harbinger of a broad regime of sanctions that may affect business activities in Israel.

It is surprising to realize Israel does not have a general regulatory binding framework for the approval of such transactions as they pertain to national security, like CFIUS in the United States , the recent UK National Security and Investment Act 2021, or similar bodies in developed countries. As a result, there are no broad cross-sector consolidated controls on foreign investments.

Activity in the form of financial decentralization (Decentralized Finance - DeFi) does not exempt from requirements in the field of prevention of money laundering prohibition or compliance with sanctions. It turns out that DeFi is subject to the same "laws of gravity" as projects in the traditional financial industry.

The proposed regulation grants the European Commission the power to take measures against companies operating in the European market that receive significant government support from countries that are not members of the European Union.

In October 2019, Israel’s Ministerial Committee on National Security Affairs (the National Security Cabinet) decided to devise a mechanism for scrutinizing foreign investments in Israel. At the mechanism’s core is the “Advisory Board for Evaluating National Security Aspects of Foreign Investments.”

President Biden’s new executive order increases the restrictions on doing business with Russia.

Israeli companies in the “risk zone” must ascertain if they are subject to sanctions and adopt a significant sanctions compliance plan.

The economic sanctions the United States has imposed on Russia have possible implications for the Israeli business community.

The recent decision of the Antitrust Commissioner with regard to the existence of a natural gas monopoly illustrates all the more emphatically the absence of an orderly legislative framework to regulate all matters pertaining to oil and gas exploration and production in Israel.

Nevertheless, moves are being made to clarify the regulatory framework concerning off shore Oil & Gas. A few weeks beforethe Commissioner’s decision,  the government had submitted a draft bill to the knesset on the matter of Israel’s maritime zones.

The draft bill is worded in a way that adopts the customary provisions of the international Convention of the Law of the Sea of 1982, even though the State of Israel is not one of its signatories.

The draft bill defines five maritime zones, including the exclusive economic zone of the State of Israel. Besides defining the boundaries of the exclusive economic zone, the draft bill also prescribes the State’s powers and authorities and the laws that shall apply to that zone.

The adoption of the draft bill by the knesset will create certainty and reduce the ambiguity surrounding all issues pertaining to oil and gas exploration, production, utilization and management in Israel’s economic waters. and should encourage foreign companies to consider entry into the Israeli market.