MODEL LAW
The Foreign Funding Prohibition and Divestment Act
An Act to halt all direct and indirect financial flows, investments, and economic support to the State of Israel and its affiliated entities.
PREAMBLE Recognizing the sovereign duty to ensure that domestic financial resources, whether public or private, are not utilized to fund foreign state apparatuses engaged in international conflicts; Affirming the necessity to protect the domestic economy and individual citizens from involuntary complicity in foreign military or state actions through taxation, corporate investment, or institutional spending; Determined to establish an absolute, transparent, and enforceable barrier against the outflow of capital to the State of Israel and any entity acting on its behalf or for its economic benefit; This Law establishes the iron rules for immediate cessation of funding, mandatory divestment, and strict administrative sanctions for non-compliance.
CHAPTER I: GENERAL PROVISIONS
Art. 1.
1. The purpose of this Law is to prohibit and immediately halt any and all direct or indirect financial contributions, investments, subsidies, and economic support originating from within this jurisdiction directed towards the State of Israel or any Affiliated Entity.
2. This Law applies to all state organs, municipalities, public institutions, registered corporations, financial institutions, and non-governmental organizations operating within the jurisdiction.
Art. 2.
1. For the purposes of this Law, "Affiliated Entity" means any corporation, partnership, fund, or organization that is headquartered in the State of Israel, majority-owned by Israeli state or private interests, or holds active, direct contracts supplying the Israeli military or government apparatus.
2. "Direct Funding" means the transfer of fiat currency, digital assets, grants, loans, or the direct purchase of sovereign bonds or corporate equity.
3. "Indirect Funding" means the procurement of goods or services, the granting of tax exemptions, or the investment in third-party mutual funds, ETFs, or holding companies that allocate more than 5% of their portfolio to the State of Israel or Affiliated Entities.
4. "Competent Authority" refers to the national financial regulatory body responsible for market oversight and economic sanctions enforcement.
CHAPTER II: PROHIBITIONS AND DIVESTMENT
Art. 3.
1. No public funds, including state budgets, municipal reserves, or public pension funds, shall be allocated, transferred, or invested in the State of Israel or any Affiliated Entity.
2. All public procurement contracts with Affiliated Entities shall be terminated. The Competent Authority shall oversee the termination of such contracts through a legal mechanism and transitional framework that addresses existing liability clauses and binding international arbitration clauses.
Art. 4.
1. Financial institutions, including banks, asset managers, and insurance companies operating within the jurisdiction, are prohibited from processing outbound capital transfers intended as institutional investments, donations, or loans to the State of Israel or Affiliated Entities. This prohibition explicitly distinguishes between institutional financial support and private, peer-to-peer family remittances, exempting personal, non-commercial remittances from restriction to avoid overreach.
2. Corporations and financial institutions currently holding assets, equities, or bonds in the State of Israel or Affiliated Entities must execute a complete divestment. To protect domestic economic stability and prevent fire sales that could financially harm domestic pension funds, the Competent Authority shall establish a phased divestment timeline and a waiver system for complex, illiquid assets.
Art. 5.
1. The state shall not grant, and shall immediately revoke, any tax-exempt status, subsidy, or state-backed insurance to any domestic organization, charity, or corporation that forwards funds to the State of Israel or Affiliated Entities.
CHAPTER III: ENFORCEMENT AND OVERSIGHT
Art. 6.
1. The Competent Authority shall publish and maintain a public, continuously updated registry of known Affiliated Entities to guide corporate and public compliance.
2. All registered financial institutions and publicly traded corporations must submit a sworn "Declaration of Zero Exposure" to the Competent Authority annually, certifying the absence of direct or indirect funding prohibited by this Law.
Art. 7.
1. Any employee, auditor, or citizen who provides actionable evidence of a violation of this Law to the Competent Authority shall be granted full whistleblower protections, including immunity from corporate retaliation and non-disclosure agreement (NDA) enforcement.
2. Whistleblowers shall be entitled to a financial reward equivalent to 10% of the final administrative fine levied against the violating entity.
CHAPTER IV: SANCTIONS
Art. 8.
1. Any corporation or financial institution found in violation of the prohibitions outlined in Chapter II shall be subject to an administrative fine of no less than 10% of its gross global revenue from the preceding fiscal year.
2. In the event of a failure to divest within the mandated phased timeline, the Competent Authority shall freeze the domestic assets of the violating entity until full divestment is verified.
Art. 9.
1. Executive officers and board members of entities found to have willfully authorized or concealed direct or indirect funding to the State of Israel or Affiliated Entities shall be held personally liable.
2. Personal liability includes a lifetime ban from holding executive positions or board seats in any publicly traded company or financial institution operating within the jurisdiction.
EXPLANATORY MEMORANDUM (EXPOSÉ)
1. Objective of the Law
The primary objective of this Law is to sever all financial and economic ties between the domestic economy and the State of Israel, including its affiliated corporate and military entities. It ensures that neither taxpayer money nor private domestic capital is utilized to support, directly or indirectly, the targeted foreign state.
2. Mechanism of Action
The Law operates on a dual mechanism of absolute prohibition and mandatory divestment. It defines "Affiliated Entities" broadly to prevent loopholes through subsidiaries or third-party contractors. By targeting both direct capital transfers and indirect support (such as procurement and tax exemptions), the Law creates an airtight financial embargo. A phased divestment timeline and a waiver system for complex, illiquid assets provide an actionable framework for market participants to liquidate non-compliant assets while protecting domestic economic stability.
3. Protection of the Individual
Citizens are frequently made involuntary participants in foreign funding through the investment strategies of their pension funds, banks, and the allocation of their tax dollars. This Law protects the individual's right to ethical financial sovereignty by forcing institutions to completely divest from the specified foreign state, while explicitly protecting private, peer-to-peer family remittances. Furthermore, it empowers individuals through robust whistleblower protections, allowing citizens to police corporate compliance without fear of retaliation.
4. Enforcement and Deterrence
To prevent corporations from treating violations as a mere "cost of doing business," the sanctions are designed to be economically devastating to violators. Fines tied to 10% of global gross revenue, combined with the freezing of domestic assets and the personal professional ruin of complicit executives, ensure that compliance is the only viable business strategy. The Competent Authority is granted the necessary power to audit, freeze, and penalize without requiring protracted judicial proceedings for administrative breaches.