Much research shows a close connection between the use and possession of cash and crime. The studies also find that the countries with the highest cash use ratio (Greece, Romania and Bulgaria) also have a high rate of black money in global terms. In Italy, a correlation was found between a high cash ratio and organized crime and a study in Missouri in the US found that a cut in cash circulation reduced crime rates in the state.
These findings have persuaded Israel to make efforts to outlaw the possession of cash in amounts higher than NIS 200,000. Such a measure was proposed as part of the budget legislation for 2023 and 2024, and the proposal has been reintroduced again now, as part of the budget legislation for 2026.
The proposal is included in the Economic Arrangements Bill in the chapter on the fight against black money and seeks to make possession of cash in excess of NIS 200,000 a criminal offense subject to an administrative fine. A source in the Israel Tax Authority explains, “The restrictions on the 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 violates privacy and limits economic freedom.
Problems left without a clear solution in law
The limit, the bill states, will be implemented only after a plan for the absorption of cash in banks is also formulated by the Bank of Israel, but it does not specify what such a plan would include. Currently, many restrictions apply to depositing cash in banks, due to the rules of the prohibition on money laundering and the requirement for proof of the source of the money. The law does not clarify how these restrictions can be overcome.
Adv. Uri Goldman, an expert on the prohibition on money laundering, explains this is where the main problem of those who keep large sums of cash “in a safe” at home arises. “The bill to limit the NIS 200,000 fell in the past because it did not provide a solution to the problem of people suddenly becoming criminals, without having the option of correcting the situation, for example by putting the cash in banks and money laundering centers.” He said, “The voluntary disclosure process initiated by the Tax Authority is also not perfect because it does not obligate the banks to accept the funds subject to voluntary disclosure, and there have been quite a few complaints about this. This is mainly relevant in the area of cash.”
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How can the state enforce the law?
Another problem is how enforcement will be carried out. The Israel Tax Authority is not prepared to and lacks the authority, to conduct random raids on the homes of citizens to check whether they have hidden large sums of money under the floor tiles. The Israel Tax Authority explains that the legislation is intended for cases in which raids are conducted in investigations against criminals and money is discovered in safes, offices and homes.
Adv. Itay Bracha, an expert in taxation, money laundering prohibition and voluntary disclosure, explains that “Possession of cash in these amounts can characterize criminal activity, and in such a case the state has the right to seize the proceeds of crime and conduct raids in cases where suspicions of criminality arise during an investigation. Those criminals who hide millions of shekels in cash in a safe will not suddenly start reporting these funds just because there is a prohibition in law. On the other hand, sometimes, holding cash in such amounts can be done innocently – such as inheritance money, an elderly person who has saved money in cash over the years, or a person who 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.
© Copyright of Globes Publisher Itonut (1983) Ltd., 2025.
