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Banks to Report Suspicious Crypto Activity in New Israeli Legislation

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A legislation that will require service providers to report suspicious cryptocurrency transactions will soon take effect in Israel.

Transfers of cryptocurrency to online gambling sites should also be reported according to the piece of legislation crafted by the Ministry of Justice. Gambling is banned in Israel despite being home to several online gambling firms.

Israel

Banks, financial institutions and other service providers are also obligated to report cryptocurrency movements involving anonymous virtual currencies such as Monero and Zcash as well as transactions through anonymous IP addresses.

The same applies to transactions above NIS5000. This translates to about US$1400, a surprisingly low threshold. Internationally, banks and other financial institutions are often required to report only transactions above US$10,000.

Sending several small transactions to circumvent the requirement will also raise the red flag.

Store Transaction Details

Another key feature of the new legislation is that service providers will henceforth be bound to keep transaction details including IP and digital wallet addresses for at least five years. The details will include the types and amount of the cryptocurrencies held by customers.

“The definition of a service in connection with financial assets is being expanded beyond currency services, to includes all activities and services performed by a business in connection with financial assets that does not include credit,” part of the draft reads.

The sweeping changes are slated to take effect on June 1. The public can, however, have a chance to make suggestions until June 13.

Welcome Move

The law, when it comes into place, will provide much-needed clarification on cryptocurrency transactions in Israel, Meni Rosenfeld,  Chairman of the Israeli Bitcoin Association is quoted as saying. It will provide definitions of what is legal and what is prohibited in terms of cryptocurrency transactions, he added.

Bitcoin

It is also a sigh of relief for banks that have been hesitant to handle cryptocurrency transactions owing to the ambiguity in regulations. Several banks have been refusing to process transactions over the uncertainty.

On at least two occasions, it has taken the intervention of the courts to compel banks to accept cryptocurrency related transactions.

It appears the law is largely meant to counter money laundering and terror financing. It contains proposals from the Israel Money Laundering and Terror Financing Prohibition Authority.

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