Decision regarding infringement by Union Bank of directives under Prohibition on Money Laundering Law
The Banking Corporations Sanctions Committee regarding the Prohibition on Money Laundering and Terror Financing decided on December 30, 2012 to impose a financial sanction of NIS 2.1 million on Union Bank of Israel Ltd. (hereinafter, "the bank") for infringing the banking directives issued under the force of the Prohibition on Money Laundering Law, 5760–2000, (hereinafter, "the Law"). The bank has the right to appeal to a Magistrates Court within 30 days of the decision.
The infringements and faults are based on the findings in the report of an examination by the Banking Supervision Department of activities carried out in 2004–2009.
The examination report findings indicated several infringements of the Prohibition on Money Laundering (the Banking Corporations' Requirements Regarding Identification, Reporting, and Record-Keeping to Prevent Money Laundering and the Financing of Terrorism) Order, 5761–2001, (hereinafter, "the order") which led, as noted, to a financial sanction in the total amount of NIS 2.1 million. Most of the infringements derived from improper preparation by the bank, primarily of the following types of issues:
1. Failure to report unusual transactions, including regarding "Back to Back" loan transactions against a deposit, whose economic logic is unclear.
2. Deficiencies and faults in information transferred to the Israel Money Laundering and Terror Financing Prohibition Authority.
3. Notably late submission of reports to the Israel Money Laundering and Terror Financing Prohibition Authority.
In its decision, the Committee took into account the bank's actions to rectify the above faults.
The Committee emphasizes the importance it attributes to a culture of full compliance with directives and regulations and uncompromising enforcement of an anti-money laundering regime. In addition to setting policies and regulations, the bank must confirm that adequate resources have been allocated to implementing and enforcing the compliance policy.
The Banking Corporations Sanctions Committee is a statutory committee, and is authorized, as part of the means of enforcing the Prohibition on Money Laundering and Terror Financing, to impose financial sanctions (fines) on banking corporations for infringements of the law or related orders and regulations. The Committee is headed by Supervisor of Banks David Zaken, and members include the Head of the Israel Money Laundering and Terror Financing Prohibition Authority, attorney Paul Landes.