Gemach Regulations

The Haredi Institute successfully fostered collaboration between Gemachim and relevant governmental and regulatory bodies to promote regulation that ensures this important welfare mechanism is maintained.

The Haredi Institute for Public Affairs played an instrumental role in shaping the Gemachim Law which was passed on December 31, 2018 after two and a half years of complex committee discussions in the Knesset. The law paved the way for instating CRS regulations and subjecting the Gemachim to the Prohibition on Money Laundering Law. The law intends to regulate Gemachim as interest-free financial institutions for deposit and credit, authorized by the State and subject to the State’s supervision. The oversight will be managed by the Capital Market Authority.

Over the past two years, a team of experts from the Haredi Institute worked closely with representatives of various Gemachim and with relevant government officials in order to advance policy that would best fit the reality of the Haredi community as well as the government. The campaign was led by Professor Yoram Margaliot, law professor at Tel Aviv University and Senior Fellow at Haredi Institute for Public Affairs. The law, said Margaliot, is an unprecedented example of applying civic policy to a communal institution while genuinely taking into consideration the special characteristics of that specific population as well as the welfare of all the country’s citizens.

According to Margaliot, if not for this law, the Gemachim would have been harmed, as the banks would not allow them to continue running unregulated accounts because times have changed and there is great international pressure to combat money laundering. “The law in its previous version,” said Margaliot, “would have caused the catastrophic collapse of many Gemachim to the detriment of countless low-income Haredi households. It would have also damaged any trust between the Haredim and the government. Adapting the law to reality was not a simple feat. The Haredi Institute united the Gemachim directors and led the negotiations vis-à-vis the government.”