The Ministry of Finance of Israel published a draft legislative act establishing measures to combat money laundering, which contains provisions directly related to virtual currencies. It is expected that the document will strengthen the level of oversight of companies operating with cryptocurrencies, thereby supplementing the existing regulations that apply to traditional providers of financial services.
In particular, the Agency plans to expand the concept of “monetary services”, following the current realities to include “all activities and services undertaken with the financial assets by a business that does not involve the provision of loans.”
“The goal is to provide supervision of financial services in addition to tangible assets, and standard of funds in the sector that has developed in recent years”, — the document says.
According to local media, the draft resolution on the prohibition of money laundering clearly defined new reporting requirements for Israeli financial institutions, including the duty to disclose information about cryptocurrency in customer activity.
“From June 1 brokers, banks, exchanges and platform, which trade cryptocurrency, Israel will be obliged to report any suspicious activity of their clients related to the cryptocurrency,” reads the draft legislation.
In particular, the experts identified 37 “alarms”, including “large amounts of more than 5,000 Israeli shekels (about $1400) transferred to digital wallet; any cash transfers that are made using anonymous IP addresses or addresses that are not correlated with the geographical origin of the connection; cryptocurrency transfers to online gaming sites; and any activity with anonymous crypto-currencies like Monero and zcash for”.
In addition, the draft document asserts the obligation of service providers to keep “all the documentation on cryptocurrency activity, namely the address of the digital wallets of all parties, an IP address, the type and amount of currency for a period of not less than 5 years.”
It should be noted, representatives of the community reacted to the proposed measures quite favorably.
“In order to improve the legislative framework for activities in the field of virtual currencies need clear instructions relating to the prevention of money laundering and financing of terrorism. The statement that the field is not regulated, is repeated as part of the automatic refusal of banks to provide services for those who trade in cryptocurrency. For this reason, the measures taken are important and necessary. They provide clarity of regulations for banks and financial institutions and set clear rules about what is allowed and what is not,” said the CEO of the international provider of payments Moneynetint Yishay Trif (Yishay Trif).
Shares his position and Chairman of the Israeli bitcoin Association’s Meni, Rosenfeld (Meni Rosenfeld), who noted that “in many cases, when banks refused to accept money whose origin is connected with the cryptocurrency” had to deal with the statement that “the field is not regulated”. According to him, the resolution will determine the rules, “which will provide banks and financial institutions understanding of who works in accordance with the law, and whose money they can get without any danger.”
“The Association has made proposals on this issue in the anti-money laundering Israel a few weeks ago, and we welcome the prompt actions of the regulator, which will allow those who are engaged in the area, to make transactions,” said Rosenfeld.
Recall that Israel is one of those States that are actively pursuing legislation to regulate cryptocurrency. So, in February the government issued an official statement recognizing the digital currency of the property and specifying the tax rates on the profit received by the holders of the new form of money.