Title: Israel’s Commitment to Fighting Financial Crime and Ethics: An Overview of Israel’s Anti-Money Laundering Measures
Israel’s dedication to combating financial crimes and upholding ethical standards is evident through the stringent measures it has taken against money laundering. This article offers an overview of Israel’s preventive measures under Article 14 of the United Nations Convention Against Corruption (UNCAC) and its strategy to tackle money laundering.
Preventing Money Laundering
Implementation of the Prevention of Money Laundering (PMLL) Law
The Israeli PMLL focuses on prevention at four levels:
- Prevention: The PMLL sets up a regulatory regime to deter and detect money laundering within the Israeli financial sector. Financial institutions are required to implement measures, such as customer identification, ongoing due diligence, and transaction reporting to the Israeli Money Laundering and Terror Financing Prohibition Authority (IMPA). The aim is to prevent illicit funds from entering the legitimate economic and financial system and facilitate effective money laundering investigations.
Penalties for Money Laundering Offenses
Punishments for Money Laundering Offenses
Under the PMLL:
- The penalty for money laundering offenses ranges from 7 to 10 years’ imprisonment depending on the severity of the crime, reflecting the legislators’ belief that money laundering facilitates serious criminal activities and merits a significant punishment.
Asset Recovery
Seizure and Confiscation of Assets
The PMLL empowers the State to seize and confiscate assets used to commit, facilitate, or receive proceeds from money laundering offenses. Courts may order the seizure and confiscation of these assets, which includes both the value generated from the commission of the predicate offense and designated assets. Seizure and confiscation are imposed in addition to any related punishment.
International Cooperation and Collaboration
Collaboration with Foreign Financial Institutions
IMPA cooperates and shares information with foreign Financial Intelligence Units (FIUs), facilitating transnational investigations of serious crimes and organized crime networks. Israeli financial institutions are required to comply with reporting obligations under Article 53 of the PMLL, ensuring effective communication with foreign institutions to address potential money laundering activities.
Ongoing Measures for Banks and Non-Bank Financial Institutions
Regulatory Oversight
Regulatory bodies actively supervise designated financial institutions, such as banks, portfolio managers, insurers, provident funds, and money service businesses, to ensure effective implementation of anti-money laundering measures. Both financial institutions and business service providers, like attorneys and accountants, are subject to regulations and circulars issued by different entities:
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Supervisory Authorities: Each institution is supervised by different entities.
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Regulator Actions: Regulators possess the power to take actions against financial institutions that fail to comply with anti-money laundering obligations.
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Enhanced Oversight: Regulators are strengthening their supervisory oversight, issuing new regulations and circulars to facilitate compliance with PMLL requirements.
Financial Institution Responsibilities
Financial institutions are expected to:
- Perform customer due diligence
- Monitor transactions
- Maintain accurate records
- Implement a reporting mechanism for suspicious transactions
- Comply with regulations and circulars issued by the applicable regulator
Regulatory Sanctions
Institutions that fail to meet these requirements may face sanctions.