The major financial market regulator the Israel Money Laundering and Terror Financing Prohibition Authority has created a fintech draft which is aimed at helping to track and control suspicious cryptocurrency activity, according to a local news company’s post published yesterday, May 28.
“The definition of a service in a financial asset that comes to replace and expand the term ‘currency services’ includes all the activities and services performed in financial assets through a business that does not involve granting credit. The intention is to enable the supervision of financial services, other than tangible assets or standard financial means, in an area that has been developing in recent years,” the draft law states.
The main points of the new financial technology regulating draft describe some red flags of suspicious activity involving crypto such as big virtual coin transfers, money transferred via an anonymous IP, and money outflows to online gambling sites.
Under the draft, brokers, banks, crypto exchanges and other commerce platforms in the country are to report any activity of their clients that may look suspicious according to 37 red flags. It is also stated that these crypto trading service providers must keep all necessary data related to trade coin activity, which includes digital wallets and IP addresses, as well as details of currency transfers for a period of no less than five years.
Being open to the public until June 13, money laundering red flags include money transfers of over NIS 5,000 (approximately $1,400) to a digital wallet and cryptocurrency transfers to online gambling sites. Great attention is paid to anonymous payments, for example, any crypto coin operations conducted from an anonymous IP address or an address incompatible with determining geographic origin, and any activity with anonymous digital currencies such as monero or zcash.
Manny Rosenfield, head of the Israeli Bitcoin Association, said: “On many of the occasions in which banks have refused to accept money that originated with cryptocurrency, we met with the statement that the field is not regulated. The new order will regulatory certainty for those involved in the field, and will define rules that are permitted and forbidden, which will enable banks and financial institutions to know who is compliant with the law, and whose money they can safely receive. The union gave a proposal on the subject to the Israel Anti-Money Laundering Authority several weeks ago, and we welcome the regulator’s quick action to allow those involved in the field to operate.”
“In order to complete the legal framework for activity in virtual currencies, clear instructions are required regarding the prevention of money laundering and the financing of terrorism. The statement that the area is not regulated is repeated as part of the banks’ automatic refusal to provide services for those who trade in Crypto. Because of this, the steps taken are important and necessary. They provide regulatory certainty to banks and financial institutions and define clear rules on what is permitted and what is not, Yishay Trif, the chief executive officer of international payments provider, Moneynetint, stated.