Dei'ah veDibur - Information & Insight

A Window into the Chareidi World

22 Teves 5761 - January 17, 2001 | Mordecai Plaut, director Published Weekly








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Shema Yisrael Torah Network











New Rules Target Money Laundering
by Yated Ne'eman Staff

Israeli banking institutions must report any transactions involving NIS 200,000 or more according to a new regulation approved by the Knesset Constitution, Law and Justice Committee on Monday. The information on these transactions will be recorded in a permanent database maintained by the Justice Ministry. The regulation will first take effect next year.

U.S. tax authorities have been waging a determined worldwide campaign against the illegal flows of money. Modern electronic methods of communications allow criminals to move funds easily all over the world, disguising their origins in illegal activities. Often the appearance of unaccountable profits is an important lead to uncovering criminal acts and tax evasion. Maintaining records of funds flow is thus an important aid to modern crime fighting.

The new regulation, proposed by Bank of Israel Governor David Klein, follows legislation passed in August aimed at preventing money laundering.

The governor's advocacy of this regulation was one of the conditions stipulated by United States tax authorities when they permitted Israeli banks to serve as authorized agents for non-American citizens who wish to buy and sell stocks traded on Wall Street, without requiring these investors to file reports with the U.S. tax authorities. U.S. citizens must register with their Israeli banks as well if they buy U.S. stocks through them.

The new regulation specifies that Israeli banking institutions must report the following transactions by their clients: Bank account cash deposits or withdrawals to the value of NIS 200,000 or more, whether in shekels or foreign currency; Cash transactions of NIS 200,000 or more; Currency exchanges of NIS 50,000 or more; Bank checks written for at least NIS 200,000, with the exception of bank checks for mortgage loans, in which case only sums over NIS 1 million must be reported; The purchase of travelers checks for NIS 200,000 or more; The deposit of checks in foreign currency equivalent to NIS 1 million or more; The transfer of at least NIS 1 million in funds to or from Israel.

The bank will not be required to report the specified transactions if they are made by a public institution, bank, credit card company, insurance company, or similar entity.

The regulation also stipulates that a banking institution must report other unusual activities, such as the unexplained use of a single vault box by a large number of people. Banks will be required to maintain records of transactions of NIS 50,000 or more for seven years.

The regulations also include instructions for verifying the identity of clients before carrying out transactions. The database now being prepared at the Justice Ministry is slated to be fully operational by April 2002.


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