Israeli gov’t proposes restrictions on holding cash

Much research shows a close relationship between the use and possession of cash and crime. Studies have also found that the countries with the highest cash usage (Greece, Romania and Bulgaria) also have a high rate of black money globally. In Italy, a relationship was found between a high proportion of cash and organized crime, and a study conducted in the state of Missouri in the United States found that reducing the circulation of cash led to a decrease in crime rates in the state.

These findings have convinced Israel to make efforts to ban the possession of cash in amounts exceeding 200,000 shekels. Such a measure had been proposed as part of the 2023 and 2024 budget legislation, and the proposal has been reintroduced again now, as part of the 2026 budget legislation.

The proposal is included in the draft Economic Arrangements Law in the chapter on combating black money and seeks to make the possession of cash in excess of NIS 200,000 a criminal offense subject to an administrative fine. A source in the Israeli Tax Authority explains that “restrictions on possession of an amount higher than this are not expected to affect the general public, but mainly criminal elements whose activities are fueled by cash.” Opponents of the move claim that it severely invades privacy and limits economic freedom.

Problems left without a clear solution in the law

The draft law stipulates that this limit will not be applied until the Bank of Israel also formulates a plan to accommodate cash in banks, but it does not specify what this plan will include. Currently, many restrictions apply to depositing cash in banks, due to rules prohibiting money laundering and the requirement to prove the source of funds. The law does not explain how to overcome these restrictions.

circumstance. Uri Goldman, an expert on prohibiting money laundering, explains that this is where the main problem arises for those who keep large amounts of cash “in the safe” at home. “The bill setting the amount of 200,000 shekels fell in the past because it did not provide a solution to the problem of people suddenly turning into criminals, without having the option to correct the situation, for example by placing money in banks and money laundering centers.” “The voluntary disclosure process initiated by the IRS is also not ideal because it does not oblige banks to accept funds subject to voluntary disclosure, and there have been few complaints about this, and this mainly relates to the area of ​​cash,” he said.

How can the state enforce the law?

The other problem is how to implement the implementation. The Israeli Tax Authority is not prepared, and lacks the authority, to conduct random raids on citizens’ homes to check whether they have hidden large sums of money under the tiles. The Israeli Tax Authority explains that the legislation is intended for cases in which raids are carried out in investigations against criminals and money is discovered in safes, offices and homes.

circumstance. “The possession of cash in such amounts can characterize criminal activity, and in such a case the state has the right to confiscate the proceeds of crime and conduct raids in cases where criminal suspicions arise during the investigation,” explains Itai Bracha, an expert on taxation, money laundering prohibitions and voluntary disclosure. “Those criminals who hide millions of shekels in cash in the treasury will not suddenly start reporting these funds just because there is a prohibition in the law. On the other hand, sometimes, they keep cash in the treasury. Such amounts can be done innocently – such as money An inheritance, an elderly person who has saved money in cash over the years, or a person who has received wedding gifts. There is a concern that the law will turn honest citizens into involuntary criminals overnight, and one must be careful about this.

Published by Globes, Israel Business News – en.globes.co.il – on November 13, 2025.

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