Israel: Banks Cannot Causelessly Refuse Transactions Involving Crypto

A new amendment to the Israeli Supervisor of Banks’ directive on money laundering and terror financing risks states that Israeli baking corporations may no longer refuse to provide payment services in transactions merely because they involve cryptocurrency, so long as the cryptocurrency service provider in the transaction is duly licensed to provide services in Israel. The amended directive further states that banks must determine their policy for engaging with cryptocurrency providers incorporated and licensed outside Israel.

The amended directive consequently requires banks to carry out an assessment and establish policies and procedures for the provision of services related to cryptocurrency transactions. These policies and procedures should derive from factors such as the type of cryptocurrency and the scope of its use, the degree of anonymity it allows, and the identity of the service provider.

A bank’s policy should include, among others, a ban on refusal to provide payment services solely because they are linked to cryptocurrencies; how the bank operates vis-à-vis cryptocurrency providers, based on applicable law in the service provider's incorporation country, and that service provider's policy; and the obligation to implement risk-reduction channels to support the provision of baking services. The bank is required to actively inform its customers of this policy, promptly upon their first request to withdraw funds from their account.

CLICK HERE to read the Supervisor of Banks’ amended directive on Management of Anti-Money Laundering and Counter Terror Financing Risks (in Hebrew).