The government is launching another initiative to fight money laundering. The provident funds will be required to report unusual financial transactions to the authority responsible for the war on money laundering in the Ministry of Justice, as the banks are now required to do. The requirement will come into effect when the funds receive cash deposits of NIS 100,000 or more, non-cash deposits of NIS 1 million or more, and withdrawals of NIS 2 million or more. The requirements are contained in a draft ordinance against money laundering that spells out the provident funds' identification and reporting obligations. The ordinance has been distributed to the provident funds this week by the Ministry of Finance capital markets division.
The draft ordinance will take effect within a year of its publication. A similar order by Governor of the Bank of Israel David Klein for the banking system has already been signed and is scheduled to come into effect within a year.
The OECD Financial Action Task Force (FATF) working group on money laundering last year added Israel to the list of countries not cooperating in the war on money laundering. Israel’s inclusion in the list created difficulties for Israeli banks that are operating overseas and seeking “qualified intermediary” status.
In order to remove Israel from the black list, the Prohibition of Money Laundering Law-2000 was enacted and the Ministry of Justice accelerated efforts to set up an anti-money laundering authority. The authority was assigned the task of setting up a database, based on reports by the various financial institutions in Israel.
The Prohibition of Money Laundering Law-2000 also authorized the Minister of Finance to issue a special ordinance to financial institutions, including the provident funds, establishing identification, reporting, and registration requirements which are similar to those now imposed on the banks.
Published by Israel's Business Arena on April 9, 2001