Against the background of the increase in the volume of activity of customers in virtual currencies and as a result of the increase in customer requests to transfer the funds arising from this activity to payment accounts managed in the banking system, the Supervisor of Banks published a draft circular today. Originating in virtual currencies.
Pursuant to this draft regulation, banking corporations will be required to perform a risk assessment and establish policies and procedures for remittances originating or their destination related to virtual currencies with regard to a risk-based approach and identifying the virtual currency service provider.
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.
It was also stipulated that the banking corporations will be 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.
In the view of the Bank of Israel, 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. At the same time, virtual currency activity also has the potential to streamline payments and international transfers.
At present, regulation and supervision of virtual currency service providers are still in the making in most countries around the world, as well as in Israel.
The Supervisor of Banks, Yair Avidan: “Against the background of the increase in the volume of activity of customers in digital currencies and due to the potential for streamlining payments and international transfers, a draft of this regulation was formulated. “Terrorist financing inherent in this activity, which will assist the customers of the banking corporations seeking to realize funds originating from activity in virtual currencies, while managing the risks inherent in the banking system as part of this activity.”
Comments on the article(0):
Your response has been received and will be published subject to system policies.
Thanks.
For a new response
Your response was not sent due to a communication problem, please try again.
Return to comment