Israel Securities Authority Cracks Down on Financial Crime: Two Companies Face Sanctions for Money Laundering Risks
The Israel Securities Authority’s (ISA) Financial Sanctions Committee meted out significant penalties to two Israeli companies for failing to adequately manage money laundering risks in accordance with the Prohibition of Money Laundering Law.
Highest Sanction Issued Against a Company for Digital Currency Conversions
In the first instance, the ISA imposed the highest sanction under the Prohibition of Money Laundering Law, totaling ILS 700,000, on a company for not taking prompt action despite receiving alerts regarding potential money laundering risks related to digital currency conversions and deposits.
Leniency Shown Towards Companies in Process of Implementing AML/CTF Procedures
In the second case, the committee imposed a sanction totaling ILS 170,000 on a company for not implementing mandatory policies, risk management tools, controls, and reporting as required by law. The committee demonstrated leniency, acknowledging that the company was in the process of implementing Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) procedures.
Global Enforcement Trends: Record Fine for Binance
These enforcement actions by the ISA reflect a growing trend in the global fight against money laundering, particularly in the United States. At the end of November 2023, Binance, the world’s largest cryptocurrency exchange, agreed to pay a record fine of USD 4.3 billion to settle money laundering charges.
Minimizing Money Laundering Risks: Practical Steps
Companies can minimize money laundering risks by taking the following steps:
- Familiarize yourself with AML/CTF laws and regulations.
- Conduct a thorough risk assessment and establish risk management procedures.
- Develop and implement a comprehensive AML/CTF policy.
- Implement rigorous
know your customer(KYC) procedures and assess potential risks associated with business engagements. - Designate a responsible officer for AML/CTF and ensure company-wide compliance.
- Provide extensive training to employees involved in financial transactions.
- Implement robust internal controls and conduct regular audits and assessments.
- Develop procedures for handling violations and potential breaches.
- Ensure continuous oversight and consistent implementation of AML/CTF policies by senior management and the board of directors.
- Adapt to new business activities and technologies as they evolve.
By following these steps, Israeli companies can effectively address money laundering risks and remain compliant with regulatory requirements.