Israel Prohibits Cash Deals for Amounts Starting as Low as $1,700 – Finance Bitcoin News

Israel’s new law will be in force on Monday. It tightens the restrictions on cash transfers and payments for large amounts of money. The goal, as stated by the country’s tax authority, is to improve the fight against organized crime, money laundering, and tax evasion. Critics are skeptical that the law will accomplish this.

Israel: Authorities Strike for Cash, Lower Limits

Amendments that take effect Aug. 1 will make it harder to pay large sums in cash or bank checks in Israel. According to the Jerusalem Post, tax officials seek to limit cash flow in order to combat illegal activities, such as laundering of illicit money and non-compliance of taxes.

The new law will require companies to use noncash methods in transactions exceeding 6,000 shekels (1,700). This is a significant decrease on the 11,000 shekel ($3,200) limit. Private persons who have not been registered as business owners and are cash-strapped will pay 15,000 shekels. This is almost $4,400.

Tamar Bracha was the one who executed the laws on behalf of Israel Tax Authority. She stated that the primary purpose of this law is to decrease cash usage. According to the Media Line news outlet the official said:

Cash fluidity is a goal that is aimed at reducing the flow of cash on the market. This is because criminal organizations are dependent upon cash. Criminal activity will be much more difficult to execute if cash is restricted.

An attorney representing clients who appealed the 2018 law’s adoption insists the problem lies in its inefficiency. Uri Goldman referred to data showing that since the law’s initial introduction, the amount of cash has actually increased. Further, Uri Goldman pointed to one of the downsides.

Over a million people in Israel didn’t have any bank accounts when the bill was passed. This law would prohibit them from carrying out any type of business and effectively would make 10% of the population criminals.

There has been controversy over a possible exemption from trading with Palestinians living in the West Bank or charities working within ultra-Orthodox groups. These cases will allow transactions with large sums of money, as long as they have been reported to tax authorities. This is unfair for the rest of society, according to Goldman.

Finance Ministry also wants to limit private cash holdings

It also contained a restriction on the private possession of large cash sums to be limited to 50 000 shekels ($14 500) in its initial draft. Although it was dropped at the time, Israel’s Ministry of Finance now plans to reintroduce it and let the parliament decide whether to adopt it after the upcoming elections.

Uri Goldman thinks that authorities should permit people to deposit cash into a bank account and declare it. This was an idea that was brought up during the initial discussions, but not approved. He noted that cash would still be in circulation, even though it isn’t used as often before.

The Bank of Israel continues to explore the possibility of issuing a digital shekel. It’s another type of national fiat that has cash-like characteristics. According to May’s results, most respondents who participated in the public consultations conducted by the monetary authorities were supportive of this plan.

Are you concerned that the law may limit cash use in Israel? Please comment below with your thoughts.

Lubomir Tatsev

Lubomir Tassev is a journalist from tech-savvy Eastern Europe who likes Hitchens’s quote: “Being a writer is what I am, rather than what I do.” Besides crypto, blockchain and fintech, international politics and economics are two other sources of inspiration.