Anti-terror banking rules now apply to cryptocurrencies

The Authority to Combat the Financing of Terrorism and Money Laundering announced on Sunday that the new regulations now apply to cryptocurrencies, Bitcoin, Fintech and a range of other digital financial products that have been less regulated to date. Authority Director Shlomit Wegman said the new rules were both an opportunity to begin cracking down on criminal abuses of these new financial products more systematically, as well as providing them with greater support and predictability for legal uses.

In recent years, there have been a lot of scandals and mega-scams perpetrated in the cryptocurrency realm, where money could move much faster than with traditional banks, but there was also little oversight.

According to Wegman, the new regulations are designed to enter that space and establish clear order and standards.

If before the Authority had to invest significant resources to discover fraud in an area where there were no official reports, now all financial products startups will have to make reports like banks.

Bitcoin, the most famous cryptocurrency in the world (credit: BENOIT TESSIER / REUTERS)

For example, certain transactions above NIS 50,000 will always require a series of reports and, in countries considered high risk for terrorist financing, even transactions above NIS 5,000 will require reports.

If one of the benefits of new financial products like Fintech has been that clients do not need to physically meet with the financial institution that is granting them a loan or transferring their funds, there will now be higher and more established standards for clients to identify themselves. .

The goal is to make it harder for terrorists and other criminals to hide behind forged documents and to create more digital paper trails that can more easily expose bad actors.

Another feature of the new regulations is a special focus on any financing used by actors suspected of committing crimes against humanity.

All regulations are based on a new set of standards established in 2018 by the Financial Action Task Force (FATF), a global group that sets financial standards to prevent and detect criminal abuse.

Wegman said that a third of the world’s countries have already started applying the new FATF standards for digital transactions and that Israel is joining this group.

He added that an additional third of the world’s countries are also in the process of catching up to the new FATF rules.

In addition to deterring terrorism and criminal financing and making it easier to capture these individuals, Wegman said the new rules should help law-abiding digital companies by giving customers greater confidence in the safety of their products.

Additionally, if previously these companies had to do the guesswork to come up with monitoring methods, now monitoring and reporting should be easier and simplified.

Wegman said: “The application of the regulations constitutes real progress for the Israeli economy, the Fintech industry and to improve financial competition” to provide better services to the public.

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