Financial Crime World

Title: Israel’s Progress in Anti-Money Laundering Compliance: A Look at the FATF Recommendations

Israel’s adherence to anti-money laundering (AML) and counter-terrorist financing (CTF) standards was recently evaluated by the Financial Action Task Force (FATF) in its latest assessment. Below is an analysis of Israel’s progress in implementing the Technical Compliance and Effectiveness (TC/EF) measures of the FATF Recommendations.

Israel’s Follow-Up Report-2022:Progress on FATF Recommendations

The country’s progress report reveals Israel’s advancements in meeting the technical requirements of the FATF Recommendations:

Large Compliance (LC) Areas

  1. R.1 - Assessing risk & applying a risk-based approach
  2. R.4 - Confiscation and provisional measures
  3. R.5 - Terrorist financing offence
  4. R.6 - Targeted financial sanctions related to terrorism & terrorist financing
  5. R.7 - Targeted financial sanctions related to proliferation
  6. R.8 - Non-profit organizations
  7. R.10 - Customer due diligence
  8. R.11 - Record keeping
  9. R.12 - Politically exposed persons
  10. R.13 - Correspondent banking
  11. R.14 - Money or value transfer services
  12. R.15 - New technologies
  13. R.16 - Wire transfers
  14. R.17 - Reliance on third parties
  15. R.18 - Internal controls and foreign branches and subsidiaries (Partially compliant)
  16. R.20 - Reporting of suspicious transactions
  17. R.21 - Tipping-off and confidentiality
  18. R.24 - Transparency and beneficial ownership of legal persons
  19. R.25 - Transparency and beneficial ownership of legal arrangements
  20. R.26 - Regulation and supervision of financial institutions
  21. R.27 - Powers of supervisors
  22. R.29 - Financial intelligence units
  23. R.30 - Responsibilities of law enforcement and investigative authorities
  24. R.31 - Powers of law enforcement and investigative authorities
  25. R.33 - Statistics
  26. R.34 - Guidance and feedback
  27. R.35 - Sanctions
  28. R.36 - International instruments
  29. R.37 - Mutual legal assistance
  30. R.38 - Mutual legal assistance: freezing and confiscation
  31. R.39 - Extradition
  32. R.40 - Other forms of international cooperation

Compliant (C) Areas

  1. R.2 - National cooperation and coordination

Israel’s progress in meeting the FATF Recommendations:

Risk Assessment: Large Compliance (LC)

  • Israel has significantly improved its risk assessment by integrating a risk-based approach into its legislation and guidance.
  • Enhanced its risk assessment methodology.

Effectiveness of Measures: Large Compliance

  1. R.3 - Money laundering offence: Israel has updated its criminal law to adequately address money laundering offenses.

    • Continued efforts to ensure comprehensive legislation and adequate penalties are essential.

  2. R.4 - Confiscation and provisional measures: The Israeli government’s asset confiscation framework is effective, providing comprehensive support to confiscating proceeds of crime and recovering proceeds from crime.

  3. R.5 - Terrorist financing offence: Israel has comprehensive legal provisions in place for terrorist financing offenses and penalties.

  4. R.6 - Targeted financial sanctions related to terrorism & terrorist financing: Israel’s measures for implementing targeted financial sanctions align with the FATF Standards and are effective.

  5. R.7 - Targeted financial sanctions related to proliferation: Israel’s laws and regulations in place are fully consistent with the FATF Standards for proliferation-related financial sanctions.

  6. R.8 - Non-profit organizations: Israel has significantly improved its AML regulations related to non-profit organizations.

Partially Compliant Areas

  1. R.18 - Internal controls and foreign branches and subsidiaries: Israel needs to strengthen its internal controls in foreign branches and subsidiaries to achieve full compliance.

  2. R.22 - DNFBPs customer due diligence: Israel’s measures related to DNFBPs customer due diligence need improvement.

  3. R.23 - DNFBPs: Other measures: Israel needs to enhance its measures regarding DNFBPs to fully comply.

The FATF reassessment also noted that further efforts are required to strengthen Israel’s AML/CFT framework in specific areas, including internal controls and foreign branches/subsidiaries (R.18), DNFBPs customer due diligence (R.22), and DNFBPs other measures (R.23).