Israel -- Sanctions Compliance Regulatory Overview

Israel does not maintain cryptocurrency-specific sanctions lists separate from international regimes like OFAC, EU, or UN sanctions, which VASPs (Virtual Asset Service Providers) must comply with as part of broader AML/CTF obligations under the Prohibition on Money Laundering Law (2000) and Israel Tax Authority (ITA) regulations for crypto providers.[1][2][5]

OFAC/EU/UN Sanctions Compliance for VASPs

VASPs in Israel, registered with the Israel Money Laundering and Terror Financing Prohibition Authority (IMPA) or ITA, must implement sanctions screening equivalent to traditional financial institutions, ensuring no dealings with OFAC's Specially Designated Nationals (SDN) List, EU restrictive measures, or UN sanctions lists, regardless of whether transactions involve fiat or virtual assets.[1][5][6]

• Screening Obligations: VASPs must screen customers, counterparties, wallets, and transactions against these lists using integrated KYC, transaction monitoring, and blockchain analytics; OFAC may list specific crypto addresses on the SDN List, requiring blocking of associated assets.[1][5][6]
• Crypto Travel Rule Alignment: Under FATF standards adopted in Israel, VASPs comply with Travel Rule-like requirements for transfers, including counterparty sanctions verification; EU's Regulation (EU) 2023/1113 (MiCA-related) influences via cross-border operations, applying to all qualifying crypto transfers without thresholds since December 2024.[2][4]

Geographic Restrictions

No Israel-specific geographic bans on crypto are noted, but VASPs must block access from or to jurisdictions under OFAC (e.g., Iran, Syria, Cuba, Sudan), EU, or UN sanctions; IP geoblocking and address screening are required to prevent sanctioned jurisdiction access, as failures led to fines like Kraken ($30M+) and Bittrex ($24M+) for Iran/Cuba/Syria/Sudan violations.[4]

Penalties for Violations

Violations trigger civil and criminal penalties under Israel's AML laws, including fines up to ILS 10 million (~$2.7M) and imprisonment up to 10 years for severe cases; global precedents like OFAC/FinCEN fines emphasize strict liability for VASPs failing to block sanctioned transactions.[4][6]

Country-Specific Sanctions Lists

Israel relies on international lists (OFAC SDN, EU Consolidated List, UN Security Council lists) without a dedicated crypto sanctions list; IMPA and ITA enforce these via VASP licensing, with no unique Israeli designations for crypto entities noted in 2026 guidance.[1][3][7]

No Israeli legal references with URLs were directly available in results; consult IMPA (impa.gov.il) or ITA (taxes.gov.il) for primary texts like Amendment 13 to the Prohibition on Money Laundering Law. Search results focus on global compliance applicable to Israeli VASPs.[1][2]