A new legislation crafted by Israel’s Ministry of Justice that obligates local banks and other financial institutions and service providers to watch for and report in due course any suspicious virtual currency-related transactions, including cryptocurrency transfers to online gambling websites, is set to take effect next month, local news outlet Calcalist Tech reported Monday.
The legislation, dated May 23, contains proposals from the Israel Money Laundering and Terror Financing Prohibition Authority that, once effective, would require banks, brokers, and cryptocurrency trade platforms, among others, to report any suspicious transactions that involve bitcoin and other digital currencies.
The new legislative piece aims to block money laundering and other fraudulent activities involving the movement of virtual currencies. It outlines 37 different money laundering red flags and obligates financial institutions to notify the competent authorities when they spot any of those red flags. They include transfers of considerable amounts of money (over NIS5,000, approx. $1,393.65) to digital wallets, any movement of funds via an anonymous IP address, cryptocurrency deposits to gambling websites, and any movements of anonymous digital currencies.
In addition, service providers will be required to keep detailed reports about their customers’ cryptocurrency activity, including digital wallet and IP addresses, the type of cryptocurrency and the exact amount of it they have in possession. The documentation should be kept for a period of at least five years.
First Cryptocurrency Regulations
As mentioned above, the new legislation was dated May 23 and is set to take effect from June 1. It is also important to note that it will be subject to public input through June 13.
It can be said that the newly introduced legislative piece represents Israel’s first actual attempt to place stricter regulations on cryptocurrency transfers taking place within the country’s borders.
Commenting on the matter, the Chairman of the Israeli Bitcoin Association, Meni Rosenfeld, told Calcalist Tech that the new law will provide much needed clarifications and definitions over what is legal and what is prohibited when it comes to digital currencies and their movement. Mr. Rosenfeld went on to say that banks and other financial institutions will now know who is compliant with the newly introduced regulations and who should be penalized for breaching those. In addition, they will be able to accept money from customers that are compliant with the rules.
The official also pointed out that banks were refusing to accept cryptocurrency up until now namely due to the lack of proper regulations.
It was last week when the Israeli Department of Cybercrime at the State Attorney’s office formally accused an Israeli national for conducting more than 20,000 credit transactions worth over NIS1 million (approximately $278,730). If found guilty, the individual would have their digital wallet, which contains 1,071 bitcoins, confiscated, among a series of other penalties.
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