On June 28, 2015, the Banking Corporations Sanctions Committee regarding the Prohibition of Money Laundering and the Financing of Terrorism decided to impose a financial sanction of NIS 4.2 million on Bank Leumi LeIsrael Ltd, for infringements of directives issued under the Prohibition of Money Laundering Law, 5760–2000.[1]  The sanction that was imposed is based on the infringements and deficiencies revealed in a Banking Supervision Department examination at the bank in 2014.


The bank appealed the Committee's decision to the Jerusalem Magistrate's Court[2] in respect of 7 out of 9 cases in which it breached its duty to report on an unusual activity pursuant to Section 9 of the Prohibition of Money Laundering Order (Identification, Reporting, and Management of Records Obligations of Banking Corporations to Prevent Money Laundering and the Financing of Terrorism) 5761–2001.


The Court rejected the bank's appeal.  In its ruling, the court set out the following:


1.     The court emphasized the importance of the prohibition of money laundering regime and the banks' functions in reporting on unusual activities.

2.     All the cases brought before the court bore characteristics that aroused suspicion and required clarification on the part of the bank.

3.     The court set out that there is no place to intervene in the Committee's decision, which did not accept the bank's arguments that sufficient examination was done to remove the suspicion.

4.     The court rejected the bank's argument that knowing the customer obviates its obligation to ask for details regarding actions that arouse suspicion.

5.     The court rejected the bank's arguments regarding impairments in the process of imposing the sanction, which harmed its right to due process.


Supervisor of Banks Dr. Hedva Ber said, "The Banking Supervision Department considers it very important that the banks fulfill all the requirements of the Prohibition of Money Laundering Law.  Israel recently joined the international task force on the matter (FATF), which favorably noted the Banking Supervision Department's actions in the area.  I am pleased that the court gave its backing to the Department's actions in this area."