How did Israel go from being a country on a money laundering blacklist to one of the three leading countries in the fight against money laundering and terror financing? The answer lies in intensive legislation in recent years, and stepped-up enforcement in these areas. Not all these moves were welcomed in the marketplace, but what is to come will probably raise a storm.
The highly flattering report by FATF on Israel also contains some remarks that should cause concern in some quarters. The report sets out Israel's future tasks in regulation, legislation and enforcement, covering all the areas that FATF considers have not yet been adequately dealt with.
One of these is real estate, and real estate agents. According to FATF, this is one of the most important areas in which Israel needs to apply its anti-money laundering regime. The basis of this will probably the imposition of rules for reporting to the Israel Money Laundering and Terror Financing Prohibition Authority on real estate agents when there is a suspicion that their clients are laundering money.
Other service providers that need to be considered are companies that provide trust services and company formation services. The people who really need to start worrying, however, and who will very likely organize to campaign against the planned legislation, are the lawyers and the accountants who provide commercial services to their clients. Only recently have they started to get used to the new "know your client" rules imposed on them, to keep the identification process documentation, and to be ready for audits of these forms by the state, or else face large fines.
Now FATF is recommending establishing even higher requirements for lawyers and accountants, among other things the imposition on them of a duty to report to the Israel Money Laundering and Terror Financing Prohibition Authority when they suspect that their clients plan to commit money laundering offences. At present, this duty mainly applies to banks and currency service providers. Ministry of Justice sources say, however, that the intention is to promote legislation in accordance with the FATF demands. They say that Israel's treatment of this area is still below the international threshold. In other countries, very high requirements are imposed on lawyers and accountants, similar to those that apply to financial entities.
Another FATF recommendation to Israel is to shorten the time taken by legal proceedings in money laundering cases. This would cover some of the most publicized cases such as the submarines affair (Case 3000), the various investigations involving Prime Minister Benjamin Netanyahu, the allegations of bribery of foreign officials against Shikun & Binui, senior managers of Israel Shipyards, and other cases. FATF recommends bringing such cases to a quick conclusion, and proposes that a court should be set up to deal with economic crime, particularly money laundering. All these matters are currently under review by the Ministry of Justice and the relevant agencies.
Published by Globes, Israel business news - en.globes.co.il - on December 10, 2018
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