Israel to impose new AML rules on digital currencies

Israel is bringing its digital currency industry under the purview of its anti-money laundering (AML) and combating the financing of terrorism (CFT) regulations. The move is meant to stamp out crime from the sector and give it legal recognition and certainty.

Israel’s Authority for Combating Terror Financing and Money Laundering recently announced that it’s seeking to raise its monitoring of digital currency transactions. Authority Director Shlomit Wegman said that the move would give the agency the ability to stamp out crime from Bitcoin.

With the new regulations, virtual currency service providers (VASPs) now have clear standards to operate under, Wegman said, adding that it will give law-abiding operators greater legal recognition and protection.

Israel has seen several scams capitalizing on the rise in digital currency interest. They have thrived because VASPs are exempted from abiding by the financial industry’s legal guidelines, said Wegman, who also heads the Israeli Privacy Protection Authority.

VASPs will now be subjected to other regulations that govern the banking sector aside from AML and CFT, she added. They include transaction reporting, with transactions above NIS 50,000 ($16,270) requiring a series of reports. When dealing with countries that the government considers to be at a high risk of terror financing, the reporting requirements will extend to as low as $1,600.

Wegman says that the new measures are meant to bring the digital currency industry in Israel in line with the recommendations from the Financial Action Task Force (FATF). Wegman is the head of the FATF’s Israeli Risk Trends and Methods Working Group. 

She commented, “The application of the regulations constitutes real progress for the Israeli economy, the Fintech industry and for improving financial competition to provide the public better services.”

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