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The Central Bank of Israel pushes local banks to un-restrict the cryptocurrency transaction generated from legit sources.
Local banks are instructed by the Bank of Israel to accept profits gained from cryptocurrencies trading and investment schemes as long as the source of income is legitimate. The process is intended to fulfill Money Laundering Prohibition Ordinance (MLPO) which applies to digital assets and virtual assets service providers.
According to the local report, the Central Bank of Israel has sent a daft to the banks with a supplement to Proper Banking Procedure 441. The document mainly focused on money laundering and numerous other financial crimes.
The legislative directive aims to enhance the cryptocurrency regulation and hence assist banks to carry out risk assessments when transferring or receiving virtual currencies. Particularly, the draft represents strict instruction from BoI to every type of financial firm, that they may no longer restrict cryptocurrency transactions from individuals or the virtual assets service providers.
BoI tells banks they can’t refuse crypto transactions: The Bank of Israel has distributed a draft procedure on money laundering precautions in connection with digital currencies. https://t.co/SyI1HzmXJ9 Globes pic.twitter.com/uvZants2sL
— Jewish Community (@JComm_NewsFeeds) December 30, 2021
However, there are several sets of standards and details that banks are obliged to comply with before processing cryptocurrency transactions. It includes the source of income, funds legitimacy, the size of the transaction, and the risk classification.
While briefing on some emerging risk concerns that still present in the initiative, Ron Tzafrati, VP of Finance and Regulation at the Israeli crypto exchange Bit2C, said:” On the one hand, the Bank of Israel finally recognizes the obligation of banks to perform a risk assessment and management and not to refuse in a sweeping manner the transfer of funds by the Bank’s customers in connection with digital currency activities. On the other hand, the bank leaves broad discretion to banks to continue to refuse in many cases, which do not really create a real risk of money laundering.”
A month ago, the Israeli financial watchdogs made public that they will impose new laws for the cryptocurrency sector, which will, however, limit the use of Bitcoin and Altcoins in suspicious financial activities. According to the initiative, every type of digital currency institution will have to create risk assessment reports, meaning they are to be regulated as the banking sector.