Israel Was Accepted as a Full Member of the FATF Organization

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  • Israel Was Accepted as a Full Member of the FATF Organization
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The FATF announced in December 2018 that the State of Israel had been accepted as a full member of the organization. Thus, Israel’s candidacy process in the recent years for FATF, led by the Israel Money Laundering Prohibition Authority in cooperation with many of the supervisory and enforcement bodies in Israel, has ended. Adv. Yael Neeman Ben Ari, Bits of Gold’s Compliance & Risk Officer, explains the impact of the move on the world of digital currencies.

On the date of Israel’s acceptance to the organization, the Report of the State of Israel’s Audit of the FATF regarding the Prohibition on Money Laundering and Financing Terrorism Law in Israel was published. The report gave praise to the effectiveness of the regime in Israel and positioned Israel as one of the three leading countries in the world with the United States and Britain. The report included a comprehensive review of the anti-money laundering and terrorist financing regime in Israel and examined how and to what extent Israel applies international standards determined by the organization.

The report gave Israel scores of excellences in three main areas: the struggle against the financing of terrorism, the effectiveness of the Israel Anti-Money Laundering and Terrorism Financing Authority, and the policy of forfeiting money derived from crime. In addition, the report criticizes Israel for the fact that no supervision duties have yet been imposed on the prevention of money laundering and the financing of terror on real estate agents, merchants of precious metals and service providers for companies and trusts. In addition, the report calls on Israel to impose on lawyers and accountants the obligation to report suspicious transactions, in accordance with international standards, and to complete the implementation of a risk-based supervision model among some of Israel’s financial regulators.

This accession process will assist and promote the cryptographic currency regulation, since the FATF, in cooperation with other international organizations, promotes the regulation of the field and requires the trading platforms and crypto companies to manage control and reporting systems in order to prevent money laundering, financing terrorism and abuse of cryptocurrencies. Regulation allows the growth of new markets and products, supervision, transparency, increased competition and the entry of legitimate players into the market.

Background

The FATF is an intergovernmental body established in 1989 with only 35 countries, most of them are G-20. The State of Israel is the 36th country to join the organization. The aim of the organization is to set international standards regarding the fight against money laundering and the financing of terror, and to promote a policy to combat money laundering and terrorism financing at the national and international levels.

This is a very significant achievement for the State of Israel, which until 16 years ago was ranked on the black lists of the organization. In 2014, the organization decided, in a rare step, to open its ranks to other countries and invited a limited number of countries, including Israel, to begin joining the organization. The State of Israel has invested considerable resources in the past two years in preparing for the international criticism carried out by the organization. This is in recognition of the importance of the procedure and its results and its impact on the international reputation of the State of Israel regarding the global fight against money laundering and the financing of terrorism.

Joining the organization will enable the State of Israel to take an active role in shaping global policy in the international fight against money laundering and terrorism financing, improve the international standing of the state, improve the financial sector’s ability to operate internationally, contribute to strengthening the economy and the business sector in Israel, and improve cooperation between Israel and other countries on the financial, intelligence and economic cooperation levels.

In conclusion, we are hopeful that in light of the significant specialization in the field and the large number of companies involved in the above activity, one of the issues that Israel will promote at the international level is the regulation of virtual coins activity, including setting specific regulatory standards for the field based on technological innovation. This activity is widely adopted by institutional players and only thus can the field fulfill its mission.

The writer is Yael Ne'eman Ben Ari, CRO and compliance officer at Bits of Gold

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