Investigation of Money Laundering in Bank Hapoalim Branch 535 and The Bank Hapoalim Trust Company

The Israel Police has advised that investigators of the National Serious and International Crimes Unit of the Investigations Division have detained for questioning customers and staff of Bank Hapoalim Branch No. 535 and of the Bank Hapoalim Trust Company.
 
The detentions constitute the next stage of an undercover investigation pursued by the Unit over a period of about a year, during which evidence was accumulated apparently indicating that offences have been committed against the Prohibition on Money Laundering Law by some of the customers, staff and managers of the branch and the Trust Company.
 
The Supervisor of Banks in the Bank of Israel and the Israel Anti Money Laundering Authority assisted in the investigation, and a team from the office of the District Attorney of Tel Aviv (Finance and Taxation) accompanied the investigation.
 
It is suspected that the sums involved in this illegal activity amounted to several hundred million dollars and involved various parties abroad. Among the aspects under investigation is the possibility that the financial and other activities undertaken by certain customers and employees of the branch and the Trust Company could constitute an apparent breach of Section 3(b) of the Prohibition on Money Laundering Law, which states "A person performing a property transaction or delivering false information with the intention of preventing reporting under section 7 or in order not to report under section 9, or to cause incorrect reporting under aforesaid sections, shall be liable to the penalty prescribed in subsection (a); for the purposes of this section, "transmitting false information" shall include failure to deliver updated information about any item required to be reported."
 
Brigadier General A. Shai, Head of the National Serious and International Crimes Unit, said that this was a complex international investigation, the purpose of which was to stop the illegal activity, and to take vigorous action against any instance of money laundering in Israel.
 
The Supervisor of Banks, Yoav Lehman, said that the police investigation of Bank Hapoalim Branch 535 and of the Bank Hapoalim Trust Company, and parallel Banking Supervision inspections carried out in them clearly demonstrate to those in Israel and abroad the extensive action taken in Israel in conjunction with the enforcement authorities and the banking system to root out any instances of money laundering.
 
As the banking system is the focus of most financial activity, accounts management and money transfers in Israel, the banks have a major responsibility and play a vital role in the fight against money laundering.
The Supervisor of Banks stressed that the banking system and Bank Hapoalim took wide-ranging measures to implement the rules imposed by the Prohibition on Money Laundering Law and by the Orders and Directives issued for purposes of the implementation of the Law. In this context the Banking Supervision Department carried out inspections in all the banks in the last few years in order to ensure that they were ready to implement the Law. The result of the combined efforts of authorities and the banks over the last few years is that in general Israel has achieved high standards in this regard that meet the international standards.
 
At the same time, in order to identify breaches of the law, law-breakers and exceptional activities, the enforcement authorities also carry out investigations and inspections of specific centers of activity. The police investigation revealed today is part of this struggle against crime and money laundering. The Banking Supervision Department, as part of its enforcement procedures, also recently performed inspections of banks and trust companies to identify exceptional activity and breaches in various activity centers of the banks.
 
The inspections in Bank Hapoalim Branch 535 and the Bank Hapoalim Trust Company alongside the police investigation brought to light findings that appeared to constitute exceptional activity that bypassed the management team and the controls practiced by Bank Hapoalim. The findings were forwarded to the police as the picture emerged, and were used by the police in their investigation.
The police and the Banking Supervision advise that now that the investigation has been made public, it will be possible to complete, verify and substantiate the findings of the undercover investigation and the findings of the inspection.
 
The Israel Police coordinated the switch to a public investigation with the Banking Supervision and with Bank Hapoalim so as to minimize the damage to the ongoing conduct of the branch and the Trust Company vis-a-vis customers. The police investigation and the Bank of Israel inspections will help Bank Hapoalim to root out any illegal or improper activity performed in these activity centers.