Israel’s cash payment limit has been capped further on Monday in a bid to crack down on crime and move towards digital payments — yet critics argue it won’t be effective.
As of today, payments to businesses will be limited to $1,700 in cash. For trade between non-business entities, like two citizens, the cap is now at $4,360 (6,000 and 15,000 Israeli shekels respectively). Initially, business payments using cash were only limited to 11,000 shekels, or $3,200.
Citizens are encouraged to use digital transfers or debit cards instead, which are exempt from these caps.
The government says the Israel cash limit will help tackle organized crime, tax avoidance, and money laundering. Israel Tax Authority officials told The Media Line: “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.”
There are exceptions to Israel’s cash limit law. Palestinians from the West Bank will be allowed to continue using large cash sums for the time being, so long as they report transactions to Israel’s Tax Authority. Charitable institutions will also be exempt.
Crypto industry reacts to Israel cash limit
Critics argue the law won’t make as much of an impact as anticipated. Attorney Uri Goldman, who represented clients that appealed against the law, said when the first phase came into effect, the amount of cash on the market increased instead of decreased.
“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,”(via The Media Line).
Crypto enthusiasts are optimistic about the law — banking the unbanked has always been a key selling point. Despite this, a 2022 Chainalyis report found that laundering money with crypto had increased by 30% from the previous year — suggesting a move from fiat to digital assets isn’t as crime-reducing as one would hope. UK regulators have also claimed that crypto exchanges are failing to call out money laundering.