Bank Of Israel Issues Draft Guidelines On Crypto Deposit

The Bank of Israel issued a draft rule on anti-money laundering and counter-terrorist financing risk management for banks that facilitate crypto-to-fiat transactions on Friday.

This action hints to Israel’s plans to legalize and regulate the interaction between banks and virtual currency service providers (VASPs).

The new policy is justified by customers’ greater participation with digital assets, according to the document:

“Due to a rise in customer activity in virtual currencies, as well as an increase in customer requests for money transfers.”

“Today, the Banking Supervision Department published a draft circular dealing with AML/CFT risk management.”

“Derived from the provision to customers of payment services related to activity originating in virtual currencies.”

What You Need To Know

The regulator emphasizes the “high potential risk” of digital asset transactions due to the anonymity of digital wallets.

Stresses the need to establish mechanisms of money identification.

For the time being, this effort is split into two parts: conducting thorough risk assessments and determining “the source of the money utilized in the purchase of the virtual currency.”

And the route taken by the virtual currency between purchase and conversion into fiat cash.

According to iexclusivenews, banks will only be able to engage with organizations who have been granted a license to provide financial asset services by the Capital Markets, Insurance and Savings Authority’s supervisor.

The draft revision was sent to the Advisory Council on Banking Matters.

Which is expected to provide additional input that will be considered by the Bank of Israel in the finalization of the guidelines, along with public comment.

VASPs must get an operating license from the Israel Securities Authority and the Capital Markets,

Insurance and Savings Authority by November 2021, according to the Israeli government.

The nation is coming closer to having a comprehensive framework for digital asset transactions now that the AML/CFT guidelines for banks are on the table.