The Banking Corporations Sanctions Committee regarding the Prohibition on Money Laundering and Terror Financing decided on September 19, 2012 to impose a financial sanction of NIS 3.8 million on Mizrahi–Tefahot Bank 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 receipt 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 2007–10.
The examination report findings indicated several infringements of the Prohibition on Money Laundering (the Banking Corporations' Requirement 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 3.8 million. Most of the infringements derived from improper preparation by the bank, primarily of the following types of issues:
1. Management of accounts for lawyers without obtaining an appropriate declaration on the beneficiary.
2. Failure to report unusual transactions.
3. Deficiencies and faults in information transferred to the Israel Money Laundering and Terror Financing Prohibition Authority.
4. Failure to take adequate actions to obtain declarations on beneficiaries in accounts opened, in accordance with the order. The bank did not make carrying out a transaction contingent on obtaining the declaration on beneficiaries, despite the fact that the customer was in the branch.
5. 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 (up to NIS 2 million per infringement) 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.