In order to fight money laundering, organized crime, and tax non-compliant, Israel has introduced tighter restrictions on payments involving a large sum of cash, effective from August 1.
In a report by the Jerusalem Post, new legislation has been passed in Israel that will tighten payments with cash for goods and services for amounts as low as $1700.
According to the tax officials, the purpose is to reduce money circulation in the country which they expect will help to limit illegal deals like money laundering as well as tax noncompliance.
From Monday in Israel, companies will be required to comply with the new legislation and cash payments for transactions starting from 6,000 shekels ($1700) would be avoided, lower than the earlier amount of 11,000 shekels ($3,200).
Tamar Bracha, an Israel official said that the major reason behind the new legislation is to reduce the use of cash, Bracha was quoted by the Media Line outlet saying;
“The goal is to reduce cash fluidity in the market, mainly because crime organizations tend to rely on cash. By limiting the use of it, criminal activity is much harder to carry out.”
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Criticism and Controversy
In 2018 when the law was first adopted, an attorney, Uri Goldman who represented clients in an appeal against the legislation spoke up again, he argued that the legislation hasn’t been efficient, citing data from which the law has been introduced initially, the amount of cash has actually increased. Pointing to another of its downsides, Goldman explained further:
“When the bill passed there were over a million citizens without bank accounts in Israel. The law would prevent them from conducting any business and would, practically, turn 10% of the population into criminals.”
Furthermore, controversy has been sparked by the law exempting trading with Palestinians from the Western Bank and charities active in the ultra-Orthodox communities. Transactions involving a large amount of cash will be allowed in these cases so far the tax Authority is notified. Goldman argued that the exemption is unfair to society at large.
Israel Finance Ministry to Limit Private Cash Holdings
In 2015, the finance ministry drafted some laws which part of the law was to limit private cash holding to a sum of 50,000 shekels ($14,500), a proposed law that was ignored at that time, however, the finance ministry is currently looking to reintroduce it to give way for the legislators to decide whether to adopt it or not after the coming election.
Again, the legal expert Goldman contends that the authorities should let people declare their cash and deposit it to a bank account. He noted that the idea was proposed during preliminary discussions on the legislation as well, but never approved.
Bank of Israel meanwhile has been looking to make digital currency available to its populace, a plan that gained massive public support as shown in the data released after seeking public comments.
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