- IMPA has published a draft guide listing potential ‘Red flags’ to facilitate private sector in forming policies regarding money laundering.
- The Israel Money Laundering and Terror Financing Prohibition Authority founded in 2002, is an independent financial intelligence unit.
Israel’s Money Laundering and Terror Financing Prohibition Authority (IMPA) has published a draft guide listing potential ‘Red flags’ to facilitate private sector in forming policies regarding money laundering using digital assets on December 31st 2019.
The draft titled, “Red Flags in the Virtual Assets Field is now open to review for public and has formed after consultations with financial advisors and members of the community. It has received backlash for targeting privacy-protecting tools like the VPN and tor users.
The authority has claimed that although digital assets promote economic innovation, it poses newer and stricter challenges in conducting financial investigations, seizing property originating from questionable sources and combating crime. Thus, the objective of the draft is to identify “problematic” economic activities and help finance bodies act on it.
The Israel Money Laundering and Terror Financing Prohibition Authority founded in 2002, is an independent financial intelligence unit that works following the Financial Action Task Force (FATF).
Many from the Israeli crypto community have already criticized it for having excessive “red flags” which they believe is the result of unjustified and impractical concerns by the regulators. Ron Tsarfaty, the Chief Financial and Compliance Officer at Bit2c said:
The guide also authorizes service providers to investigate compulsorily when any user triggers one or more of these red flags. They also instructed to report immediately to the police if suspicions arise regarding a person’s involvement in money laundering or terror financing.
Complaints have arisen regarding certain red flags which focus on users who try to protect their privacy such as using coin mixers, dealing in-dash or zcash. It also puts any users of privacy-enhancing devices like VPN and tor under the radar.
Obvious and expected cases of darknet vendors, suspected ICO pumps, Ponzi scams and other ransomware cases also covered in the list. But, it also includes older people, users of P2P and decentralized exchanges which have led to a backlash from the community.
People who are in a hurry to trade and those donating to charity using digital currency are also infamously included. The long list of red flags requires service providers to monitor the following:
It only remains to see how this will impact the Israeli crypto community and whether the Financial authority will approve changes owing to these criticisms.