Israel AML Order for Financial-Asset Service Providers

The order sits under Israel’s Prohibition on Money Laundering framework and the regulated financial services licensing regime. It uses the term “service provider” to cover credit providers and providers of service in a financial asset that are required to hold a license under the Regulated Financial Services Law. The 2021 amendment also added a definition of “virtual currency,” generally covering a digital unit or representation of value that can be traded or transferred digitally and used for payment or investment.

For crypto-market readers, the order is most relevant because it places virtual-currency service activity within the same operational AML framework used for other covered money-service activity. It does not create a standalone crypto statute. Instead, it updates Israel’s AML order so that covered financial-asset providers, including virtual-asset activity, are subject to identification, risk review, reporting, list-screening and recordkeeping duties.

The order requires covered providers to adopt customer-identification and know-your-customer procedures, register identifying details, and assess the risk profile of service recipients. The official English consolidation describes ongoing monitoring, enhanced review for higher-risk cases, and treatment of politically exposed persons and service recipients linked to listed countries or territories.

Reporting obligations include ordinary threshold-based reports and reports of unusual activity, including attempted transactions. For virtual-currency activity, reportable details can include the type and amount of virtual currency, wallet addresses, blockchain transaction identifiers, exchange-rate information, and certain device or network details when service is provided online or through an application.

The order also requires screening against terrorism and proliferation-financing lists, maintenance of digital databases, and retention of transaction and identification records for at least five years. Records for virtual-currency transfers can include originator and beneficiary information, wallet addresses, IP data, IMEI data and other transaction details.

A major crypto-specific feature is section 7A, which addresses electronic transfers and virtual-currency transfers. The text requires covered transfer records to include identifying details for the originator and beneficiary and, for virtual currency, wallet-address information and transfer-related details. One provision, section 7A(b)(2), has a separate commencement mechanism: the 2021 amendment states that it begins on a date set by the Commissioner, rather than automatically on the general eight-month commencement date.

That caveat matters for editorial status. Official Capital Market Authority reporting later described a public call for input on implementation of the Travel Rule for electronic transfers and virtual currencies, including technological readiness, privacy and information-transmission issues. Editors should verify the current operative status of section 7A(b)(2) before characterizing that particular transmission duty as fully in effect.