Remote VASP serving residents in Israel
Foreign-incorporated entity that offers exchange, custody, or transfer services to residents of a jurisdiction without establishing a local entity or office.
Remote VASP is conditionally permitted in Israel with a local entity, subject to AML obligations and high licensing burden.
Verdict Details
- Permitted
- conditional
- Local entity required
- Yes
- Licensing burden
- High
- Last updated
- 2026-07-13
AML Obligations
- VASPs must screen customers, counterparties, wallets, and transactions against sanctions lists (e.g., OFAC SDN) using integrated KYC, transaction monitoring, and blockchain analytics.
- Travel Rule compliance adopted — threshold: ILS 5,000 (~$1,350 USD) for transfers, including counterparty sanctions verification.
- Ongoing AML/CFT compliance obligations under the Israel Money Laundering Prohibition Authority (IMPA) oversight.
- Must maintain compliance handbook, real-time transaction monitoring, and regulator engagement as ongoing licensing conditions.
Key Restrictions
- Foreign-incorporated entity must obtain a Financial Asset Service Provider (FASP) license from ISA/CMISA to serve Israeli residents — no carve-out for remote/cross-border VASPs.
- Local entity/incorporation is effectively required because the license is issued to entities under Israeli jurisdiction; applicant must be of legal age, solvent, and with no unfit convictions.
- Capital requirement: ILS 300,000–1,000,000 (~$80K–$270K USD) depending on activity type.
- Licensing process takes 6–12 months; application requires company registration, business plan, compliance handbook, IT/security policies, risk models.
- Transactions must route through licensed entities in the 'closed garden' model; custody requires customer asset segregation.
- Stablecoin regulation under development by Bank of Israel (BOI); payment tokens may face additional BOI oversight.
Key Risks
- High enforcement risk for unlicensed remote operators — the FASP licensing framework matured in 2023-2024 and applies to all services provided in a financial asset, including crypto exchange and custody, regardless of provider location.
- Banking access historically challenging; Israeli banking sector only gradually opening after landmark court cases and Bank of Israel guidance.
- Regulatory landscape still evolving — National Crypto Strategy Committee interim report proposes unified regulator, token issuance rules, and banking integration with 2026 legislative steps expected.
- ISA proposed amendments may reclassify tokens (security vs. utility), creating potential retroactive compliance gaps.
- Unlicensed remote VASPs risk regulatory action, potential criminal penalties, and asset blocking (OFAC SDN-listed addresses).
Evidence
This verdict synthesizes the following facts. Each fact links to its primary source(s).
Israel Money Laundering Prohibition Authority — AML/CFT compliance
Financial Asset Service Providers Regulation Law (2023) — FASP licensing covering crypto exchange, custody, portfolio management. Framework matured 2023-2024 after years of uncertainty.
VASP: Financial Asset Service Provider (FASP) License from ISA/CMISA. ILS 300,000-1,000,000 (~$80K-$270K USD) depending on activity type. 6-12 months. Banking sector gradually opening after landmark court cases and Bank of Israel guidance.
CUSTODY: Included under FASP license; customer asset segregation required
EXCHANGE: FASP license. Strong crypto startup ecosystem but banking access historically challenging.
Being an Israeli citizen/resident of legal age, legally competent, and not bankrupt (for individuals); or solvent for corporations.
No convictions for offenses unfit for financial handling.
Supervision of Financial Services (Regulated Financial Services) Law: Core licensing framework (no direct URL in results; see CMA site via ).
Exchanges: Require a license as a "service provided in a financial asset" under the Supervision of Financial Services Law from the CMA. Recent ISA amendments (August 2024) allow non-bank Tel Aviv Stock Exchange (TASE) members (e.g., brokerages) to offer trading in approved cryptocurrencies like Bitcoin and Ethereum via licensed exchanges.
Custody Providers: Need the same CMA financial asset service license for management or custody of virtual currencies; Israeli Trust Act provisions may also apply. Transactions must route through licensed entities in the "closed garden" model.
Prepare documents: company registration, business plan, proof of capital, directors' details, compliance handbook, IT/security policies, risk models.
Submit to CMA (or relevant authority for VASPs/exchanges/custody).
Undergo verification/review (8-14 weeks, depending on completeness).
Receive decision; ongoing obligations include real-time monitoring and regulator engagement.
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.
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.
Travel Rule adopted — threshold: ILS 5,000
Verdict Attribution
- Source:
- AI-Generated · Unreviewed
- AI synthesized:
- 2026-07-13 (deepseek-chat)
- Last updated:
- 2026-07-13
- Confidence:
- medium
This verdict was produced by an AI model from the underlying facts. Confirm with counsel before relying on it for material decisions.
Conditional — a non-resident VASP can only serve Israeli residents by obtaining a FASP license from the ISA/CMISA, which requires local incorporation, ILS 300K–1M capital, comprehensive AML/CFT programs including Travel Rule compliance at ILS 5,000, and routing through licensed entities in the closed-garden model, with no exemption for remote or foreign-incorporated operators.
Questions this verdict aims to answer
- May a non-resident provider serve residents from abroad?
- Does cross-border service trigger licensing, registration, or AML obligations?
- What enforcement risk exists for unlicensed remote operators?