Tue, Dec 17, 2013

http://www.jpost.com/National-News/EU-assails-Israel-for-lax-efforts-in-fighting-money-laundering-335220

A European legal body has harshly criticized Israel for being the only member country that has not complied with certain obligations in fighting money-laundering and terror financing.

According to the Justice Ministry, the criticism from Moneyval of the Council of Europe came when the organization adopted a report on December 12 that included a nearly unprecedented demand that Israel report back on its progress in the deficient areas within 12 months.

The report found Israel deficient in two key areas. One key area was the failure to properly regulate offices that, though they don’t finance companies themselves, are often inextricably linked to the corporate finance world, such as law firms, accounting firms, trust companies, certain real estate entities and the diamond industry.

According to one Moneyval expert, regulating the diamond industry is of utmost importance since it accounts for substantial amounts of Israeli exports and constitutes a high risk sector for money-laundering.

The second key area was the failure to properly regulate the current exchange industry, also at great risk for use in money-laundering and terror financing.

The report slammed the Knesset Finance Committee for dragging out proceedings that are part of passing and implementing laws relating to regulation of the current exchange industry.

The criticism comes at a particularly awkward time for Israel, when the government faces internal criticism for recently blocking a former government agent from testifying in a US terror-financing case, against the Bank of China, on behalf of families of victims of terror attacks.

Despite the criticism, Israel did receive some praise for greater overall improvements and efficiency in the operations of its agency for enforcing regulations on money-laundering and terror financing. Paul Landes, the head of Israel’s regulatory agency, expressed satisfaction at the compliments regarding certain aspects of improvement, while stating he was deeply concerned about the international business consequences of failing to solve the deficiencies.