Israel Will Start Banning Cash Payments Over $4,400 On Monday

Starting next week, Israel will prohibit cash transactions above $4,400 and business transactions above $1,760 (or transactions involving the equivalent amount in shekels).

Depending on the company they are interacting with, Israeli residents will no longer be permitted to utilize cash for purchases larger than $4,400 or $1,760 as of Monday.

Israel’s hold on money is becoming more rigid

Beginning August 1, Israelis won’t be allowed to pay in cash for purchases for more than 6,000 shekels ($1,760). This provision, according to the law firm Herzog Law, covers payments for loans, salaries, gifts, and other business-related expenses.

Additionally, residents won’t be allowed to pay in cash for personal transactions totaling more than 15,000 shekels ($4,400).

These sums represent a decrease from the transactional caps Israel has previously established for 2019. At the time, personal transactions were restricted to 50,000 shekels ($14,660) and company transactions to 11,000 shekels ($3,220).

Charities, specific religious institutions, Palestinians living in the West Bank, and family and close friends are exempt from the regulation, but tourists are required to abide by it. Future legislation preventing Israelis from keeping more than 200,000 shekels ($58,660) in cash at home is anticipated.

Lawbreakers will be subject to harsh consequences. Depending on the magnitude of the transaction, those who engage in business transactions in violation of the restriction may be subject to fines ranging from 15% to 30% of the value of the transaction.

A fine starting at 10,000 shekels will be imposed on people who break the law in personal transactions up to 25,000 shekels. If the transaction is greater, the fine might range from 15% to 25%, depending on how much money is at stake.

The law, according to the Israel Tax Authority, is intended to lessen Israelis’ usage of cash and combat criminality, such as money laundering, tax evasion, and financing for terrorism.

The new regulations will encourage digital transfers and make it simpler for Israeli authorities to keep an eye on financial activity.

Other developments might potentially contribute to this. The Bank of Israel stated in June that it would later this year evaluate the viability of a retail central bank digital currency (CBDC), with findings anticipated by the end of 2022. A CBDC would be simple to track and manage, much like other digital payments.

Israel is merely one of many countries that are creating or researching CBDCs. This month, the French central bank declared its intention to introduce a “wholesale” CBDC—a virtual currency for use among financial institutions—by 2023.

Lael Brainard, vice chair of the Federal Reserve, said that after Congressional approval, it could take “at least five years” to establish a CBDC elsewhere in the United States.

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