Here is the converted article in Markdown format:
Banks Must Ensure Strict Compliance with Anti-Money Laundering Regulations
In a bid to combat money laundering and terrorist financing, the Israeli banking sector is now required to adhere to stricter regulations regarding customer identification, reporting obligations, and risk management.
New Directives Issued by Supervisor of Banks
According to new directives issued by the Supervisor of Banks at the Bank of Israel, banks must perform face-to-face identification on account holders and authorized signers using valid identification documents. This move aims to prevent fraudulent activities and ensure that financial institutions are aware of their customers’ identities.
- Face-to-face identification required for account holders and authorized signers
- Valid identification documents must be used
In addition to these measures, banks must also report “extraordinary” actions to the Supervisor of Banks, such as large cash transactions or suspicious activity. The Anti-Money Laundering Authority’s centralized list of declared terrorist organizations and operatives will be used to check identification details against the List.
Existing Legislation and Regulations
These regulations are in line with existing legislation and the Proper Banking Management Directive No. 411, which outlines measures to prevent money laundering and terrorist financing. The directive also emphasizes the importance of formulating a policy on know-your-customer, risk management, customer identification, ongoing monitoring, and reporting obligations to the Supervisor of Banks.
Regulatory Authorities
The Bank of Israel’s Supervisor of Banks is responsible for overseeing banks in Israel, including credit card companies and entities involved in clearing debit card transactions. Non-bank financial entities, such as non-bank credit providers and financial asset service providers, are regulated by the Capital Market, Insurance and Savings Authority.
- Other regulatory authorities include:
- Anti-Money Laundering and Terrorism Financing Authority
- Privacy Protection Authority
- Competition Authority
Government Deposit Insurance
Israel’s financial infrastructure is designed to reduce risks inherent in payment systems. The Zahav system, implemented in 2007, provides real-time credits and transfers and has brought Israel’s clearing method to international standards. The Bank of Israel provides intraday credit to participating banks to ensure smooth operations, which can be used without interest against full collateral for the day’s activity.
Transactions between Affiliates
The Supervisor of Banks has issued directives regarding transactions between a bank and its affiliates. An affiliate is defined as any entity that controls or is controlled by the bank, or any entity in which the bank holds a significant stake.
- Financial institutions are prohibited from engaging in certain activities with their affiliates without proper authorization
- Specific reporting requirements for transactions between banks and their affiliates
Recent changes have been made to how these activities are classified, with the Supervisor of Banks issuing new directives to ensure that financial institutions adhere to strict anti-money laundering regulations.