Bank of Israel obliges banks to clear crypto (photo by Rami Zerniger)
The Bank of Israel announces today (Thursday) the publication of a draft regulation in the field of risk management, the prohibition of money laundering and the prohibition of terrorist financing resulting from the provision of payment services in connection with customer activity in virtual currencies, or in other words: Sweeping.
According to the Bank of Israel, a draft circular published today comes against the background of the increase in the volume of activity of customers in virtual currencies and, as a result, the increase in customer requests to transfer the funds arising from this activity to payment accounts managed in the banking system.
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Although the Bank of Israel has warned that activity in virtual currencies has a high risk potential for money laundering and terrorist financing. In virtual currency activities, the anonymity built into the currency itself can be used, or digital wallets that are opened without any customer holding them being identified. Also, in this way significant amounts may be transferred between countries, without supervision or regulation.
But the bank added that at the same time, activity in virtual currencies also has the potential to streamline payments and international transfers.
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According to the regulation in Israel, as well as in the world, with regard to emerging virtual currencies, then the Bank of Israel went into the thick of things and published a draft regulation for the banking corporations:
Risk assessment will be required to establish policies and procedures for transfers of funds originating or their destination related to virtual currencies, taking into account the risk-based approach and identifying the service provider in the virtual currency. In cases where the service provider has received a license to provide service in a financial asset from the Commissioner of the Capital Market, Insurance and Savings and has been subject to a money laundering order, the banking corporations will be required to examine each case individually and will not be able to determine a sweeping refusal.
The banking corporations are required to find out the source of the funds used to purchase the virtual currency and the path taken by the virtual currency from the date of its acquisition until its conversion into Fiat currency and its deposit in an account with the banking corporation.
It should be noted that the proposed amendment was circulated today to the Banking Advisory Committee and Public Comments, but a final directive will be formulated after discussion of the Banking Advisory Committee’s comments and public comments.
The Supervisor of Banks, Yair Avidan: “The Supervisor of Banks monitors activity in virtual currencies and local and international regulation developing in the field. Against the background of the increase in the volume of activity of customers in these currencies As a result, the draft regulation sets out a number of principles for risk management. .
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