On March 18, 2018, the Law for Reducing the Use of Cash, 2018 (the "Law") was published in the Official Government Gazette (the "Gazette"). The Law is intended to limit the use of cash, as a way to fight crime and money laundering, and to enable the use of advanced and efficient means of payment. The Law sets out a number of prohibitions and restrictions on the use of cash and checks, distinguishing between transactions to which a dealer (any person who sells an asset or provides a service during the course of his business) is a party and transactions between private individuals.

The Law limits the ability to pay cash in transactions through a prohibition to accept or grant a cash payment if the amount payable in cash is 10% of the transaction price or higher or if the amount payable in cash exceeds the amount specified in the Law (NIS 11,000 when a dealer is a party to the transaction; NIS 50,000 when a transaction is between private individuals), whichever is lower. In addition, it was determined that a cash payment should not be received or paid as wages, as a contribution, as a gift or as a loan, if the amount of the payment exceeds the amount specified in the Law, except for a loan granted by a supervised financial entity.

It should be noted that the aforementioned restrictions do not apply on cash payments between relatives, except for wages, and to state authorities that will be determined in an order (not yet published).

In addition, the Law limits the ability to use checks for a transaction, as wages, as a contribution, as a loan or as a gift. In transactions in which one of the parties is a dealer, the Law requires to specify in the check the name of the recipient of the check, regardless of the amount. In the case of transactions between private individuals, the Law imposes the above limit on payment of checks exceeding NIS 5,000. The Law also prohibits the endorsement of a check and the receipt of an endorsed check in the event that the details of the endorser are not specified in check (this prohibition will not apply when the endorsee is a banking corporation, the postal bank or a holder of a license to provide deposit and credit services).

The Law also prohibits a banking corporation, the Postal Bank or a holder of a license to provide deposit and credit services to pay off a check with respect to which various restrictions are applied by Law (for example, a check that has been endorsed more than once, a check that lacks the details of the endorser and the endorsee, etc.).

The breach of the provisions of the law by a dealer constitutes, in certain cases, a criminal offense (which may result in a fine and even imprisonment in cases of fraud or false registration) and may also result in the imposition of a administrative fine of up to 30% of the payment in cash or of the amount of the check or double the amount in case of repeated violation.

In addition to the above, the Law promotes the use of electronic means of payment by authorizing the Minister of Finance to determine rules obligating dealers to possess specific means used to read charge cards, requiring dealers to record means of payment and obligating purchasers of real estate rights to declare the means of payment of the consideration.

The Law will enter into force on January 1, 2019. The provisions of the Law in connection with breaches of limitation regarding checks will enter into force on July 1, 2019.