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Gov’t approves limits to cash transactions

The government has unanimously approved the recommendations of the committee on limiting the use of cash in the economy headed by director of the Prime Minister’s Office Harel Locker. The aim is to combat black capital and money laundering. The committee estimates the extent of the black economy at 20% of GDP, leading to a loss of state revenue of NIS 40-50 billion annually.

Cash transactions will initially be limited to NIS 10,000, and a year later to NIS 5,000. Cash transactions between private individuals will be limited to NIS 15,000, or NIS 50,000 in the case of the purchase of a used car. Cash transactions above these amounts will become a criminal offense, although the business community has expressed doubt over whether the limits can be enforced.

Endorsement of checks is considered by the committee to be equivalent to cash, and so checks will be transferable only up to the amounts permitted for cash transactions. The maximum amount of a transaction payable by check will be set by the Bank of Israel.

The committee also seeks to promote the use of debit cards and identifiable cash cards, that is, electronic wallets. The Antitrust Authority began to examine the use of debit cards a year ago, as a way of boosting competition in the credit card market. Debit cards are seen as an effective way of combatting black capital, and of reducing the commissions paid by businesses to credit card companies.

The Locker committee recommendations have been welcomed in some quarters, but small businesses have expressed fears that they will adversely affect them, while there are those who claim that black capital is these days not mainly transferred in cash but in digital payments.

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