FATF-GAFI. Israel's measures to fight money laundering and the financing of terrorism and proliferation
This report summarises the AML/CFT measures in place in Israel as at the date of the on-site visit 6 to 22 March 2018. It analyses the level of compliance with the FATF 40 Recommendations and the level of effectiveness of Israel's AML/CFT system, and provides recommendations on how the system could be strengthened.
a) Overall, Israel has a good understanding of its ML risks. Israel's major ML risks are mostly identified and assessed. The understanding of TF risks is generally very good. Israel's major TF risks have been identified and assessed. Activities and policies are in line with the identified ML and TF risks. DNFBP supervisors do not have a strong understanding of the potential ML/TF risks faced by the entities they supervise.
b) Israel has strong, national AML/CFT co-ordination and includes all relevant competent authorities. Israel's domestic co-ordination is driven by the Executive Steering Committee, its Implementation Committee, and sub-committees of the latter committee, which together comprise the country's main AML/CFT policy development tool. Bilateral and multilateral AML/CFT co-operation at the operational level is strong, particularly among the Israel Money Laundering and Terror Financing Prohibition Authority (IMPA), Shin-Bet, the Israel National Police (INP) and the Israel Tax Authority (ITA), and also between the Israel Companies Authority (ICA) and the ITA.
c) Israel's highly effective use of financial intelligence largely contributes to the prosecution and investigation of all types of ML, with a large number of cases relating to self-laundering, and cases relating to legal persons. The focus on ML activity deriving from fraud, tax evasion and other organised-crime predicate crimes is in line with the country's ML risk profile. Authorities demonstrated their ability to work together on complex and significant ML cases all the way through conviction and sentencing. The quality of IMPA's financial intelligence and analysis effectively supports the operational needs of LEAs. From 2014-2017, Israel averaged 415 ML investigations, 50 ML prosecutions, and 34 convictions in ML prosecutions per year.
d) Overall, the competent authorities are confiscating the proceeds and instrumentalities of proceeds of crime successfully. Israel set out confiscation of criminal proceeds and instrumentalities as a high-level priority and a policy objective, and results are in line with the ML risk profile to a very large extent. From 2013-2017, Israel averaged EUR 24.6 million per year in confiscations achieved.
e) Israel has developed a wide range of effective instruments and mechanisms to combat terrorism and terrorist financing in all its aspects. Different types of TF cases are prosecuted, and offenders convicted. These cases are consistent with Israel's TF risk profile. Shin-Bet's and the other security agencies' proactive efforts are effective in disrupting terrorism at the early stages. Israel effectively deprives terrorists, terrorist organisations, and terrorist financers of their assets and instrumentalities related to TF activities. A large amount of funds and property have been frozen, seized, and confiscated.
f) Co-operation and co-ordination of operational matters on NPOs between authorities is strong but the overall jurisdictional response to NPOs is not comprehensively coordinated. Israel has established a registration and supervision framework covering the NPOs most at risk of TF abuse. The ICA is a proactive registrar and supervisor and its approach contains strong elements which mitigate the risk of TF abuse.
g) Israel has implemented comprehensive and effective counter-proliferation finance targeted financial sanctions (PF-TFS) with regard to Iran, which are implemented without delay. Since the requirements of PF-TFS in relation to DPRK only came into force during the on-site visit, the compliance programmes for FIs, DNFBPs, and supervisors which were in place to ensure implementation of PF-TFS obligations relating to Iran, were not yet applicable with regard to DPRK.
h) In the financial sector, the application of risk-based supervisory model is ongoing, with Israel Securities Authority being the most advanced, and the Capital Market, Insurance and Savings Authority in relation to money service businesses being less advanced.
i) Regarding DNFBPs, Israel has not included real estate agents, dealers in precious metals, and trust and company service providers in its AML/CFT system. Diamond dealers, lawyers and accountants were only recently incorporated in the AML/CFT regime. Lawyers and accountants do not have STR requirements. DNFBP supervisors are at an early stage in the development of a risk-based model for supervision and awareness-raising initiatives for AML/CFT obligations.
j) There is a good level of transparency of basic information on legal persons and arrangements. The high quality of beneficial ownership information available supports a significant number of cases against legal persons by the ITA and by other LEAs and the SAO in light of the adequacy, accuracy, and currency of such information. Though Israel has sought to understand the risks posed by legal persons and arrangements, the assessment and understanding of vulnerabilities and misuse are not comprehensive.
k) Israel provides constructive and quality information and assistance when requested, but faces occasional challenges in providing this in a timely manner. Israel is successfully receiving responses to its requests for international co-operation. Israel also extensively uses its informal channels of co-operation and authorities are overall well engaged and committed to execute requests where permitted.