Israel Restricts Cash To Fight Money Laundering

As part of a new government plan to reduce money laundering, cash transactions between businesses in Israel will be limited to 5,000 shekels ($1,400) by law.

Israel is likely to collect 40 billion-50 billion shekels from the move - nearly 20 percent of the country's annual budget, according to Harel Locker, director-general of the prime minister's office, reports Reuters.

"This is a lot of money and we want this money," Locker told reporters. "We want to be a leading country in the battle against tax evasion and money laundering."

The move comes as Israeli government officials are beginning the 2015 budget cycle and arguing about how best to fund national priorities such as healthcare, education and infrastructure repair.

In 2012, there were 3 million unidentified cash transactions of more than 5,000, creating a pile of 273 billion shekels, whose intended purpose is essentially unknown. Locker believes some portion of that money being laundered is used by organized crime and terrorists.

"Cash and cash equivalents are the fuel of the black economy," said Locker, whose committee was appointed by Prime Minister Benjamin Netanyahu.

To reduce the use of cash, the panel recommended that banks issue debit cards, as opposed to credit cards which is all that is currently offered nationally.

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