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Israel Tackles Financial Crime Prevention: Best Practices for a Safer Economy
Financial crime has emerged as a significant threat to Israel’s economic development, with estimated global losses exceeding $1.4 trillion. In response, Israeli authorities and financial institutions are adopting best practices to prevent and detect financial crimes.
Anti-Bribery and Anti-Corruption Efforts
Corruption and bribery have become major concerns for companies operating in Israel, particularly those with cross-border transactions. The Foreign Corrupt Practices Act (FCPA) has led to numerous enforcement actions against Israeli companies, resulting in hefty fines. To combat corruption, the Israeli government has established its own framework for corruption prevention, including policies for preventing and detecting bribery.
Financial Crime in Capital Markets and Banks
The capital markets have seen an alarming increase in financial crimes, including money laundering, financing of terrorism, and market offenses. Schemes such as price manipulation, insider dealing, and circular trading have become common tactics used by criminals to exploit financial services. To combat these crimes, Israeli regulators are implementing stricter monitoring rules and enhanced due diligence procedures.
Anti-Money Laundering and Counter-Financing of Terrorism
Israel has implemented a robust anti-money laundering (AML) and counter-financing of terrorism (CFT) regime, including:
- Transaction monitoring typology reports
- Regulatory gap assessments
- Policies for preventing tax evasion schemes
- Adoption of emerging technologies such as machine learning to detect anomalies and optimize monitoring rules
Sanctions Compliance
Israel has implemented a sanctions compliance program focused on OFAC/UN/Israel sanctions regimes, as well as other international sanctions programs. The program includes:
- Internal controls
- Testing procedures
- Advanced analytics to improve entity filtering and screening
Anti-Bribery and Anti-Corruption Compliance
Israeli companies are implementing anti-bribery and anti-corruption (ABAC) compliance programs that include:
- Effective policies and procedures for government- interaction activities and transactions carrying heightened compliance risks
- Third-party risk management
- ABAC risk assessments
- Compliance analytics
Anti-Financial Crime in Capital Markets and Banks
Israel’s financial institutions are implementing internal controls and monitoring rules to detect securities fraud and market abuse. The country is also adopting advanced analytics for rogue-trading detection using transactional data and communications data.
As Israel continues to tackle the threat of financial crime, it is clear that a multi-faceted approach is necessary to prevent and detect these crimes effectively. By implementing best practices in anti-bribery and anti-corruption, AML/CFT, sanctions compliance, and anti-financial crime prevention, Israeli authorities can help ensure a safer economy for all stakeholders.