According to reports, the Bank of Israel (BoI), has instructed local banks that they will accept the profits of digital asset ventures provided the money source is not connected to criminal activities. This procedure is meant to be used in conjunction with the Money Laundering Prohibition Ordinance that applies to crypto-related entities as well as their operations.
Israeli Banks Can No Longer Refuse
A recent report from Israel claims that the central bank has sent a draft circular with a supplement to Proper Bank Procedure 411 to local banks. This document is about money laundering and other financial crimes.
This directive is intended to improve the rules that apply to cryptocurrency entities and manage banks’ risk when transferring and receiving digital assets. The Bank of Israel has instructed all local financial institutions to accept any profits from cryptocurrency operations.
The circular outlines the details that banks should keep in mind when processing digital asset transactions. These details include the nature and size of the settlement as well as the risk classification.
Ron Tzafrati (VP of Finance and Regulation, Bit2C), spoke about some of the remaining issues.
The Bank of Israel recognizes that banks have to conduct a risk assessment and manage their funds and refuses to allow customers to transfer money to the Bank in relation to digital currency transactions. The bank allows banks broad discretion to refuse to transfer funds in certain cases that do not pose a risk of money laundering.
A month ago, Israeli authorities announced that they would impose new regulations for the cryptocurrency industry. This should reduce the use of bitcoin and other altcoins in illegal activities. All crypto-related businesses will need to file regular reports. They will be treated like banks.
Mrs. Freeman’s Struggles
It is worth noting Esther Freeman’s case, which will be included in the new legislation that allows local banks to accept profits from cryptocurrency.
The retired Israeli citizen invested around $3,240 in bitcoin in 2013 to get into the digital asset market. She multiplied her investment 100 times over the next eight years, thanks to the primary cryptocurrency’s price growth.
Bank Hapoalim, one of the most prominent banks in the country, refused to deposit $324,000 she received from fiat-cryptocurrency platforms. The original deposit made years ago was in cash. According to the financial institution the source of the funds could be linked to money-laundering and terrorist financing.
Mrs. Freeman hired a lawyer to help her get her money and her child a place to live in. She also filed a lawsuit against Bank Hapoalim. Bank Hapoalim was not allowed to restrict account activity for clients who have a connection to cryptocurrencies, according the court. The financial institution received the case and promised to review it and “respond in the normal way.”
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