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Israel’s Banking Sector Toughens Up on Anti-Money Laundering Measures

In an effort to curb money laundering and terrorist financing, Israel’s banking sector is increasing its efforts to identify and verify customers’ identities.

Customer Identification

According to new regulations, banks in Israel must obtain specific documents from corporations before opening an account for them. These documents include:

  • Registration certificates
  • Foundation documents
  • Attorney certifications

For corporations registered outside of Israel, additional documentation may be required, such as a certificate from an Israeli attorney confirming the corporation’s existence and registration.

Online Identification

The regulations also require banks to use advanced technology to verify customers’ identities online. This includes using:

  • Video conferencing
  • Biometric identification methods

to confirm customers’ identities.

Transaction Monitoring and Reporting

In addition to customer identification, banks in Israel are required to conduct ongoing transaction monitoring and reporting on transactions that may be suspicious or related to money laundering or terrorist financing. Banks must also appoint a Money Laundering Officer to oversee these efforts.

Penalties for Non-Compliance

The penalties for non-compliance with these regulations can be severe. According to the Prohibition of Money Laundering Law, 5760-2000, individuals found guilty of money laundering or terrorist financing can face:

  • Imprisonment
  • Fines

Israel’s Anti-Money Laundering Record

Israel has been recognized as a high-risk country for anti-money laundering efforts by the Financial Action Task Force (FATF). However, the country has made significant progress in recent years to improve its AML/CFT policies and activities. Israel is currently compliant with FATF recommendations.

FAQs

  • What is the key AML law in Israel?
    • The Prohibition of Money Laundering Law, 5760-2000.
  • Is Israel a high-risk country for AML?
    • Yes, according to FATF. Israel faces a particularly high terrorist financing risk from sources outside the country and has identified various sources of money laundering risk.
  • Is Israel FATF compliant?
    • Yes, Israel is a member of FATF and has been recognized as compliant with its recommendations since 2018.