In October 2018, the Israel Tax Authority's customs officers at Ben Gurion Airport's arrivals Masada VIP Lounge found $160,000 (NIS 582,000) in cash on Russian-Israeli billionaire Valery Kogan. By law he was obliged to have reported any amount above NIS 50,000 that he was bringing into the country.
This was one of 96 such cases in the first half of 2018 that the Israel Tax Authority Committee for imposing Financial Sanctions was required to rule on that was released for publication earlier this week.
Kogan protested his innocence and told the customs investigator who questioned him that the money that was found was to fund his stay in Israel for him and his guests and he backed his claim with documents to show that he had withdrawn the sum from a bank. Kogan added that he understood the requirement to report and had not expected that the customs representatives at the airport would initiate enquiries about the matter.
Kogan also claimed that the VIP representative who had escorted him had given him an empty form to sign, which as it turned out declared that he did not have NIS 50,000 on him (the amount that can be brought in via the airport), and only subsequently had the representative filled in by himself the declaration about the money. The Israel Tax Authority Financial Sanction Committee eventually confiscated NIS 120,000 of the amount (Just over 20% of the total amount that was found on him).
Kogan is best known in Israel for his lavish homes, which include a palatial mansion on Caesarea's Hadar Street, currently on the market and for which Sotheby's is asking $258 million, and a seafront Tel Aviv apartment, which is on the market for $65 million.
When asked about the origins of the money, Kogan said that it was from his business operations in Russia and that he had withdrawn the money from his bank account, the day before he had flown to Israel. The Israel Tax Authority accepted this version of the violation regarding the source and the reason for his having the cash.
In its ruling the committee wrote, "In the circumstances discussed, in which the violation was committed by a known businessman, who comes in and out of many countries, who is acquainted with the obligation to report and even filled the declaration form on leaving Russia, it would be expected that he would at least seek clarifications on how it is filled in and where the declaration form about money is submitted. Moreover, even if it is correct that the offender claims he signed an empty form, without bothering to read it because it was in a language he is not fluent in, then this does not represent a defense or justification for filing a false declaration with the authorities."
"It was up to the offender to clarify the contents of the document on which he was signed and not to rely on the representative of the escort company to fill the form in for him, or alternatively he should not have signed the document if he did not have all the relevant information. Furthermore, in the transit area there are many signs including in Russian, explaining the obligation to report and how to report."
In the 96 cases in the first half of 2018, the Israel Tax Authority imposed NIS 2.4 million in fines. 72% of the violations took place at Israel's land borders and 28% at airports. The border crossing where most offenses took place was the River Jordan crossing (34 offenses) between Israel and Jordan followed by Ben Gurion Airport (27), the Begin (Taba) checkpoint between Israel and Egypt (23) the Erez checkpoint between Israel and Gaza (7), and the Rabin (Arava) checkpoint be3tween Israel and Jordan.
Under the terms of the Prohibition on Money Laundering Law, Israelis are obliged to report to the authorities when they either take out or bring in more than NIS 50,000 to the country at airports, or NIS 12,000 at land border crossings.
One of the best known money laundering practices is smuggling cash through borders. In Israel, as in other countries, there is a legal requirement to report income and expenditure and the Customs Administration and Israel Tax Authority investigations department are responsible for enforcement. Any sum above NIS 50,000 transferred or deposited in any way - checks, travelers checks, bank transfers, or cash - must be reported.
One of the strangest cases that took place in 2018 and was published by the Israel Tax Authority Committee for imposing Financial Sanctions was the sending of hundreds of thousands of dollars that didn't belong to anybody. In August 2018 an international parcel arrived at Ben Gurion airport from Hong Kong, sent by an international courier company, addressed to the Ramat Gan Diamond Exchange. According to the declaration, the parcel was supposed to contain diamonds worth $285,000 but it actually contained $290,000 in cash. The Committee summoned both the recipient and the international couriers but nobody knew who was supposed to receive the cash.
The recipient had no explanation as to why the parcel contained the cash even though it was sent to a company that he controlled, and he claimed it must have been sent by mistake. He insisted that it was not his money and that the sender was a supplier in Hong Kong, who had probably sent the money instead of diamonds. The couriers denied any connection or information about the money in the parcel and said that the company was prohibited from opening parcels in order to check the contents and so there were no suspicions about them knowingly delivering the parcel. At no time before the Committee convened did anybody file a claim for the money, which had been impounded. The Committee decided to seize all the money for the benefit of the state.
Another extremely irregular offense that was reported concerned Yuri Moshayev who was apprehended at Ben Gurion Airport with $40,000 in cash. Moshayev went along the red (something to declare) channel in order to declare two smartphones but when his baggage was x-rayed, the contents included frozen fish, even though bringing in meat and fish products into Israel is prohibited.
When it was made clear to Moshayev that the fish would be confiscated and destroyed, he surprised the customs officials and reported that in the belly of the fish was $40,000 in cash. Moshayev, an Israeli citizen who owns a restaurant in the US, claimed cthat the source of the money was the bank account of a company owned by his nephew in the US, and that he had been asked by him to bring the money into Israel. The Committee decided that the attempt by Moshayev to smuggle the money for somebody else, under the camouflage of his declaration about smartphones in order to distract the officials from finding the money and evade reporting it, was very grave. Consequently he was fined NIS 80,000 - over half the amount.
In another case described in the report, the Head of the Arara Local Council Nayef Abu Arar violated the obligation to report. In December 2018, he entered Israel from Jordan via the River Jordan Bridge in the north with NIS 34,500 on him in a range of currencies, after leaving Israel the day before with NIS 38,000 in cash, also in a range of currencies wthout reporting on the matter.
Abu Arar claimed that the source of the money was from his work and was to pay his son's tuition fees in Jordan but he only paid part of the fee and presented a document to back his claim. However, the Committee decided that the document was no proof of the source of the money and imposed a fine of NIS 14,000 on Abu Arar.
Published by Globes, Israel business news - en.globes.co.il - on December 30, 2020
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