Financial Crime World

Israel’s Money Laundering and Terror Financing Prohibition Authority: Fighting Financial Crimes and Protecting Consumers

Israel’s history of combating money laundering and terrorist financing dates back to the early 2000s when the country was listed as a non-cooperative country by the Organisation for Economic Co-operation and Development (OECD) Financial Action Task Force (FATF). In response, Israel enacted stringent anti-money laundering (AML) and counter-terrorist financing (CTF) legislation and established the Israel Money Laundering and Terror Financing Prohibition Authority (IMPA).

Israel’s Resolve Against Financial Crimes

  • In the early 2000s, Israel was listed as a non-cooperative country by FATF due to inadequate measures against money laundering and terrorist financing.
  • Israel enacted rigorous AML/CFT legislation, leading to its full membership in FATF in December 2018.
  • The country confiscates over US $25 million annually as a result of its AML/CFT efforts.

Israel’s Bulwark Against Money Laundering: IMPA

Established in 2002, the Israel Money Laundering and Terror Financing Prohibition Authority (IMPA) is Israel’s leading agency in the battle against money laundering and terrorist funding.

Mandate and Responsibilities

  • Monitors financial intelligence and maintains a national database containing information from reporting financial institutions, government agencies, and international peers.
  • Operates under strict rules to protect the financial system’s security and integrity.
  • Collaborates with Israeli law enforcement agencies and international financial intelligence units.

Role in Intelligence and Protection

  • Provides intelligence to law enforcement agencies in relevant money laundering investigations under legal procedures.
  • Balances the need to protect privacy rights with preventing the misuse of financial institutions for criminal activities.

Legislation: Prohibition of Money Laundering and Terrorist Financing Acts

Two key pieces of legislation define Israel’s regulatory landscape for combating financial crimes:

  1. The Prohibition of Money Laundering Act, 5760-2000

    • Grants authorities enhanced tools to battle money laundering.
    • Requires financial institutions to identify clients and monitor transactions to detect anomalous behavior.

  2. The Prohibition of Terrorist Financing Act, 5765-2005

    • Aligns Israeli legislation with international anti-terrorism standards.
    • Establishes administrative and judicial measures to strengthen AML/CFT capabilities.

Virtual Assets in Israel: Regulation and Transparency

A milestone in Israel’s ongoing war against financial crimes was the establishment of regulatory frameworks for virtual assets.

  • The Anti-Money Laundering and Counter-Terrorist Financing (AMLO) legislation took effect on January 2, 2020.
  • Requires suppliers of financial services in virtual currency to register and report any suspicious transactions.
  • Ensures the safety and transparency of the virtual assets industry.