On Thursday, the central bank of Israel released the draft regulations that could allow crypto businesses to operate in the country’s financial system by asking banks to analyze each company individually rather than imposing blanket refusals.
Banking firms must perform risk assessments and establish policy and procedures for transactions arriving from or going into virtual currencies, according to the draft, which was published on the bank’s official website.
This would make the banks analyze each case of the service provider (licensed crypto companies) on its own merits and demerits. This is much better than a sweeping blanket ban.
Banks will also be forced to disclose the source of funds used to buy cryptocurrency, as well as trace the virtual currency’s chain of travel “from the time of purchase until its conversion to fiat currency and deposit into an account with the banking organization.”
The proposal is in line with new anti-money laundering (AML) regulations that went into force in November. At the time, crypto proponents in Israel told CoinDesk that banks have traditionally adopted an ad hoc approach to accepting crypto deposits and that new guidelines would make it easier for banks to onboard crypto consumers.
After receiving feedback on the proposal, definitive guidelines will be developed.
To avoid the use of cryptocurrency for money laundering, regulators throughout the world are tightening AML legislation and compliance. Legislators in the European Union are working to ensure that the EU’s new anti-money laundering institution has strong jurisdiction over virtual currencies. Coinbase, Fidelity, and Robinhood joined a group of important financial businesses working in the United States earlier this year to bring digital assets in line with worldwide AML requirements.
