The Banking Supervision Department welcomes Israel’s becoming the 38th member of the prestigious FATF (Financial Action Task Force) organization, after it successfully passed an evaluation by the organization. Joining the organization will enable the State of Israel to take an active part in establishing the international standards in the global battle against money laundering and terrorism financing, will improve the State’s international standing, and will strengthen the banking system’s ability to act in the global sphere.
The FATF’s recognition of the Banking Supervision Department as a leading regulator of supervision and regulation of the banking system in Israel as complying with the international standards is a direct result of the Banking Supervision Department’s activities in recent years in combatting money laundering and terrorism financing. The actions taken by the Banking Supervision Department included promoting legislation and directives, carrying out ongoing follow-up and monitoring and conducting examinations at banks of these issues. These led, over the years, to enforcement via additional capital requirements in respect of compliance risks and investigations and limitations on dividend distributions, requirements to change processes and procedures at banks, imposing financial sanctions and establishing personal sanctions in respect of failures.
As a direct result of the Banking Supervision Department’s activities, the banking system in the past decade strengthened the AML/CFT risk management infrastructure, and in recent years also adjusted itself to changes in legislation and requirements in the areas of tax offenses as a predicate offense (for Israeli residents and nonresidents), among other things due to the investigations by US authorities of some of the banks.
The FATF’s report notes that the banking system in Israel has a deep understanding of the risks and has developed risk assessment and risk management methodologies. The report also noted that the banks are the main source of information in Israel on beneficiaries and controlling interests at corporations and trusts, due to the extensive “Know Your Customer” process that they carry out and due to the Banking Supervision Department activities vis-à-vis the banks on the issue.
The Supervisor of Banks said, “The Banking Supervision Department attributes the utmost importance to complying with the international AML/CFT standards, which are promoted by the FATF, and welcomes the recognition of the supervision and regulation of the banking system. This recognition is the product of extended and consistent efforts by the Banking Supervision Department over the years, and serves as an additional indication that the lessons of the conduct being investigated now in the US with regard to Israeli banks have been learned and implemented. We are committed to imposing an effective AML/CFT regime in Israel and will continue to act in collaboration with the Israel Money Laundering and Terror Financing Prohibition Authority and the other enforcement authorities and financial regulators in order to continue to improve the existing regime in Israel.”