Understanding Decree-Law No. (4) of 2026 on the Reduction of Cash Use in Palestine
On February 17, 2026, Decree-Law No. (4) of 2026 on the Reduction of Cash Use in Palestine was issued, published in the official gazette on February 25, 2026 and is now in force. The Decree-Law establishes a formal regulatory framework limiting the use of physical cash in high-value transactions and mandating reliance on non-cash payment instruments beyond a defined threshold. It is designed to reduce systemic risks associated with heavy cash circulation, enhance traceability of financial flows, and reinforce the institutional architecture governing payments in Palestine.
This article examines the Decree-Law’s structure, scope, regulatory mechanics, and compliance implications, before situating it within Palestine’s broader financial governance framework.
Definitions and Conceptual Architecture
Article (1) of Decree-Law No. (4) of 2026 sets out a detailed definitional framework that is central to interpretation and enforcement.
1. “Transaction”
A “transaction” is defined broadly to include not only a single payment, but also a series of related payments arising from one contractual relationship or a single economic purpose, even if executed in stages. This drafting choice prevents artificial fragmentation of payments to circumvent the statutory ceiling.
2. “Total Transaction Value”
The “total transaction value” encompasses the full agreed financial consideration between the parties, inclusive of taxes and associated expenses. The ceiling therefore applies to the aggregate value of the transaction, not individual installments.
3. “Cash” and “Non-Cash Payment Method”
“Cash” is limited to legally circulating paper and metallic currency while “non-cash payment methods” encompass electronic instruments that transfer the value of a transaction to a bank account or electronic wallet without using physical currency. The definition is technologically neutral and encompasses bank cards, electronic transfers, advanced payment systems, and other approved digital instruments.
Scope of Application
Pursuant to Article (3), the Decree-Law on reduction of cash use in Palestine applies to all transactions exceeding the statutory ceiling set out in Article (5), whether civil or commercial in nature. It covers transactions producing financial effects, whether periodic or one-off, and applies to dealings conducted in any legally circulating currency.
The law binds both natural and legal persons. Individuals, companies, financial institutions, traders, service providers, and public bodies are subject to its provisions when operating above the defined threshold. The breadth of application reflects a systemic regulatory orientation where the law regulates transaction structure across the economy rather than targeting a specific sector.
Limited Statutory Exceptions
Article (4) provides a narrow exception for the disbursement of aid, donations, and social development expenditures directed to natural persons where non-cash methods are genuinely impracticable or inaccessible. These exceptions are not self-executing and remain subject to implementing instructions.
Reduction of Cash Use in Palestine: The Cash Ceiling
Article (5) introduces the core operative rule:
Cash payment is prohibited for any transaction exceeding 30,000 Israeli Shekels (ILS), or its legal equivalent in other currencies.
Above this threshold, settlement must occur exclusively through non-cash means.
The Decree-Law authorizes the Palestinian Monetary Authority (PMA), in coordination with the Ministry of Finance and Planning, to amend the ceiling by decision. This mechanism enables responsive calibration based on economic or systemic conditions.
Regulatory Authority of the Palestinian Monetary Authority
Article (6) significantly expands the PMA’s regulatory authority. In coordination with the Ministry of Finance, the PMA may determine:
- Temporary increases to the ceiling during crises or emergencies;
- Maximum cash limits for loans and financing facilities;
- Limits on cash withdrawals, deposits, and currency exchange;
- Sector-specific restrictions (including real estate and luxury goods);
- Financial ceilings on cheque values and their endorsement procedures;
- Donation and gift cash limits;
- Transactions that must be conducted exclusively via non-cash means;
- Personal or non-profit family transactions;
- Additional exemptions.
This delegation framework positions the PMA as the principal supervisory authority managing systemic cash circulation within the Palestinian financial system.
Compliance Obligations for the Reduction of Cash Use in Palestine
Article (7) imposes affirmative duties on both public and private actors.
Government entities must execute transactions using non-cash methods and make such methods available to the public. Financial institutions, companies, traders, professionals, and service providers are required to maintain adequate records documenting the payment method used, in accordance with applicable legislation.
In addition, the PMA, public bodies, banks, and payment service providers are tasked with promoting non-cash payment systems and conducting awareness efforts to facilitate adoption. The Decree-Law therefore combines restrictive rules with structural transition policy.
Penalties and Enforcement
Article (8) establishes administrative monetary penalties:
- A fine between 5% and 15% of the total cash value involved in the violating transaction;
- The fine may be imposed on one or both parties.
Penalties are doubled in cases of:
- Repeat violations,
- Transaction fragmentation to evade the ceiling,
- False declaration of transaction value.
Importantly, Article (8)(3) clarifies that a violation does not invalidate the underlying contractual obligations. The sanction is regulatory and financial; it does not render the transaction void.
Supervisory authority is formally assigned under Article (9) to the PMA, acting in coordination with the Ministry of Finance, the Ministry of National Economy, the Financial Follow-Up Unit, Customs Police, and other enforcement bodies.
Article (10) grants a rectification period of up to six months from publication, subject to possible extension, allowing affected parties to adjust operational practices.
Practical Implications for Businesses
Decree-Law No. (4) of 2026 restructures transaction architecture above a defined monetary threshold. Businesses operating in Palestine should:
- Map transactions exceeding ILS 30,000 and eliminate high-value cash settlement practices;
- Upgrade payment infrastructure to ensure access to transfers, card processing, and electronic wallet systems;
- Revise contractual templates to remove clauses permitting high-value cash settlement;
- Strengthen internal controls documenting transaction aggregation and payment channels;
- Closely monitor implementing instructions issued by the PMA.
The operational scope of the law will continue to evolve through secondary regulation.
Alignment with Anti-Money Laundering and Counter-Terrorism Financing Frameworks
The Decree-Law operates within Palestine’s broader anti-money-laundering and counter-terrorism financing regime under Decree-Law No. 39 of 2022 on Combating Money Laundering and Terrorist Financing. That law establishes a national framework for preventing, detecting, and penalizing financial crimes, including mandatory reporting obligations and the institutional role of the Financial Follow-Up Unit.
With the reduction of cash use in Palestine and requiring traceable electronic settlement beyond defined thresholds, Decree-Law No. (4) of 2026 inherently strengthens the enforceability of AML and CTF controls. Electronic transactions generate audit trails that facilitate risk monitoring, suspicious transaction reporting, and supervisory oversight. In practical terms, the reduction of large cash movements narrows avenues for opacity and supports the integrity objectives embedded in the 2022 AML/CTF regime.
Position Within Palestine’s Digital Transformation Framework
Decree-Law No. (4) of 2026 is situated within a broader structural shift in Palestinian financial governance toward digitization, formalization, and systemic risk management. Over recent years, the Palestinian Monetary Authority (PMA) has articulated a multi-year strategy (2021–2025) prioritizing digital transformation, payment system modernization, and financial inclusion. This strategic direction was given legislative foundation through Decree-Law No. 41 of 2022 on National Payments, which regulates payment service providers and establishes the legal infrastructure for structured electronic settlement systems in Palestine.
Within that framework, the PMA has expanded national payment rails, including the E-SADAD electronic bill payment platform, which links ministries, public authorities, and private entities to centralized digital settlement channels. Complementary initiatives, including digital financial identity tools such as the iDPlus mobile application, are designed to broaden access to formal financial services.
The timing of the measure is also linked to systemic liquidity concerns. The PMA has publicly reported persistent accumulation of Israeli shekels within the Palestinian banking system. Reducing large cash transactions therefore serves both governance and liquidity management objectives.
Reduction of cash use in Palestine builds directly on this infrastructure. By prohibiting high-value cash settlement, the legislature transitions digital adoption from policy encouragement to regulatory obligation. That said, the pace of transition remains uneven. Card penetration remains limited, and digital literacy and infrastructure disparities persist across geographic and socioeconomic lines. Implementation will therefore depend on regulatory enforcement as well as continued investment in access, affordability, and public trust.
Conclusion
Implementing these changes, particularly in sectors historically reliant on cash settlement, requires structured compliance planning. Kurdi & Co. advises businesses, financial institutions, and regulated entities on financial regulatory compliance and commercial law in Palestine.
We assist clients in reviewing operational exposure under the Decree-Law, developing sector-specific compliance strategies, mitigating regulatory and financial risk, as well as navigating implementing instructions issued by the PMA. For tailored guidance, contact Kurdi & Co.
This Article was researched and written on March 24th, 2026 by Amer Kurdi.
