Israel implements a proper anti-money laundering policy in the field of virtual currency supervision and is one of the world leaders in the fight against terrorist financing and money laundering, according to the FATF (International Task Force on Combating Money Laundering and Terrorist Financing) in a follow-up report examining Israel’s progress In a regime banning money laundering and terrorist financing.
As part of the report, Israel was awarded a high ranking – Largely Compliant – in the areas of new technologies, with an emphasis on virtual currencies. This, among other things, against the background of the amendment of the Anti-Money Laundering Order (identification obligations, reporting and management of registrations of credit service providers for the prevention of money laundering and terrorist financing). The order is intended to deal with money laundering and expose money launderers, by imposing an obligation on credit service providers to identify and verify the details of their customers, and to report, subject to certain conditions, the financial transfers of those customers.
The order also applies the money laundering regime to service providers in financial assets, including service providers regarding “virtual currency”, with the intention of enabling supervision of financial services that are not in tangible assets.
Israel is taking an active part in shaping world policy
In 2018, Israel was accepted as a member of the FATF – a prestigious international organization of only about 40 member countries, most of them G20 countries – which sets the international rules in the field of anti-money laundering and terrorist financing. Membership in the organization enables the State of Israel to take an active part in shaping global policy in the field of the international fight against money laundering and terrorist financing and the cooperation between Israel and other countries in the financial, intelligence and economic and legal cooperation.
The organization’s new report is a continuation of the international audit conducted in Israel in 2018, and presents the progress in correcting the deficiencies discovered in the anti-money laundering regime. The report shows that Israel has maintained its high ranking in the areas of new technologies, with an emphasis on activity in virtual currencies, and in the areas of national cooperation between investigative and enforcement bodies, along with an increase in the ranking in the field of electronic transfers.
As part of the follow-up process, the state is required to report on the actions it has taken to correct deficiencies in the technical aspect (existence of a normative regime that meets international standards), as well as make adjustments to the regime in line with updates to international standards (such as adding virtual assets). In addition, the state is required to report on the steps taken to correct deficiencies in the effectiveness of the regime (the way in which the state actually implements the regime) and to present progress toward actions identified in the audit report as high priority actions and recommended actions in the audit report (Recommended Actions).
As part of the progress report, the state managed to raise the rating regarding debt management regarding international transfer of funds (the state increased from the rating of Partly Compliant to the rating of Largely Compliant), as well as maintain a high rating in recommendations updated by the organization, which deal with national cooperation In virtual currencies.
Israel has only minor shortcomings
The AFTF’s previous report from 2018 criticized, among other things, the fact that Israel has not yet applied the anti-money laundering and terrorist financing regime to real estate brokers, precious metals traders and service providers for companies and trusts.
According to the FATF decision, the organization’s next report regarding progress in correcting deficiencies in the Israeli anti-money laundering and terrorist financing regime was set for June 2024, and by that time the expectation from Israel is to complete the correction of all anti-money laundering obligations on real estate agents. Service providers for companies and trusts, and traders in precious metals, as well as the implementation of debts on branches and subsidiaries.
The summary of the report stated that “Overall, Israel has made progress in addressing some of the deficiencies identified … minor deficiencies remain.”
According to Adv. Illit Ostrovich-Levy, head of the Anti-Money Laundering and Terrorist Financing Authority, “The State of Israel is at the forefront of technological advancement and we are working to enable the fintech sector to operate and promote entrepreneurship and innovation. The Authority works to prevent criminals and terrorist organizations from abusing the financial sector of the State of Israel while promoting the financial integrity of the Israeli economy around the world. “
Advocate Eran Davidi, Director General of the Ministry of Justice, added that “the decision of the FATF to adopt the audit report to correct the shortcomings in the anti-money laundering and terrorist financing regime indicates an improvement in regulation in the State of Israel. “The Authority for the Prohibition of Money Laundering and Terrorist Financing in the Ministry of Justice. This is a significant achievement for the State of Israel, which is one of the world’s leaders in the fight against money laundering and terrorist financing in general,