Financial Crime World

Israel Makes Progress in Combating Financial Crime, but Lags Behind in Supervision

TEL AVIV, ISRAEL - A recent assessment by the Financial Action Task Force (FATF) and MONEYVAL, a FATF-style regional body, has found that Israel has made significant strides in identifying and responding to money laundering and terrorist financing risks. However, despite these efforts, there are still areas for improvement, particularly in supervision and preventive measures.

Risks and Challenges

The assessment highlights several key risks and challenges facing Israel:

  • High terrorist financing risk from sources outside its borders
  • Money laundering risks from fraud, tax offenses, organized crime, public sector corruption, and the use of cash

Despite these risks, Israeli authorities have demonstrated their ability to identify, investigate, and disrupt terrorist financing activity at an early stage using a range of effective instruments and mechanisms.

Effective Measures Taken by Israel

  • Financial intelligence unit and law enforcement agencies cooperate well with international counterparts
  • Successful identification and prosecution of money laundering and terrorist financing cases

Areas for Improvement

While Israel has made significant progress, there are still areas that need improvement:

  • Non-Profit Organizations: Israel needs to improve its coordination on preventing the misuse of non-profit organizations for terrorist financing
  • Money Service Business Sector: Financial institutions have a good understanding of the risks they face, but this understanding is weaker in the money service business sector
  • Supervision: Israel’s supervisors have not yet developed a full risk-based AML/CFT-specific supervision model
  • Excluded Sectors: Certain sectors, such as real estate agents, dealers in precious metals, and trust and company service providers, are not included in the country’s AML/CFT system. Lawyers and accountants are also not required to report suspicious transactions.

Confiscation of Illicit Gains

Despite these areas for improvement, Israel has made significant progress in understanding its risks, investigating and prosecuting money laundering and terrorist financing, and depriving criminals of their illicit gains. The country has confiscated an average of over €24 million per year in recent years.

FATF Membership

With the publication of this assessment, Israel has met the FATF’s membership requirements and has become an official member of the organization with immediate effect.