“Bitcoin” unveiled its first local ATM in Israel for obtaining the digital currency on March 30. Three weeks later, it is worth reviewing the state’s efforts to fight terror- financing and money- laundering in the bitcoin arena, where crime and terrorist fundraisers are using innovative 21st century tricks.
Bitcoin, a peer-to-peer payment system, was created as a sort of virtual cash in 2009 by a mysterious Internet guru who went by the name of Satoshi Nakamoto. Bitcoin.
Since its inception, the currency’s value has been extremely volatile. It rose from $15 at the start of 2013 to a peak price of more than $1,150, but has dropped significantly since then.
People can purchase bitcoins through online exchanges, but so far, they have proven to be unreliable.
Mt. Gox, one of the biggest bitcoin exchanges sites, declared bankruptcy in February, having lost millions of dollars.
In addition to legitimate transactions, the lack of oversight has led bitcoins to be used for buying and selling illegal drugs, Internet malware and laundering money, and authorities have warned it could be used to fund terrorism.
Bitcoin is not the only new hi-tech terror-financing and money-laundering option; they include PayPal, Web- Money, e-money and other electronic transactional platforms.
The Israel Money Laundering and Terror Financing Prohibition Authority is one of the leading units in fighting this new threat.
The IMPA is still a relatively new agency, founded only in 2002, but has exploded in growth to include 50 staff members, including a large number of specially trained lawyers and financial experts.
The agency works closely with the Shin Bet (Israel Security Agency), police and other Israeli agencies.
Internationally, it has signed cooperative agreements for sharing financial reports at a rapid rate.
Certain aspects of the IMPA’s activities and its partnering agencies and countries also cannot be publicly revealed in this report.
In addition, Israel is part of the Egmont Group of Financial Intelligence Units (which has 139 financial intelligence units), with attorney Paul Landes, the head of IMPA, a committee member and the chairman of the operational working group.
The Justice Ministry does not comment on specific cases.
However, it is a matter of public record that people arrested in cases relating to the crimes of money-laundering and terrorism-financing have included: currency- trader Yaakov Gerbi (six years in prison, NIS 4 million seized for money-laundering), Asraf Jasser (nine years in prison for millions in fraud against Egyptian banks and tax fraud in Israel), Yakoub Abu Asav, Kafah Sarhaan and Ahmad Elian (part of a Hamas cell in Jerusalem undertaking building Hamas support as well as terrorism-financing.) The IMPA’s main contribution is its analysis of a massive volume of financial reports on suspicious transactions filed by financial institutions, and translating the analysis into investigations in coordination with other agencies.
Part of what makes the IMPA effective is that financial institutions are sometimes even more honest in reports they provide the IMPA than to other law enforcement agencies because they view the reports as routine, not as an issue under investigation.
However, Israel has received heavy criticism from the Council of Europe’s Moneyval and a parallel Israeli good-government NGO for not keeping up legislatively with fighting money-laundering and terrorism- financing regarding lawyers, accountants and diamond dealers.
Still, The Jerusalem Post has learned that despite that criticism, Israel has scored big wins in enforcement on the issue, with the IMPA getting the highest grade according to international requirements.
As for being behind on having updated legislation on the issue, the Post has learned that while Israel is under international pressure to improve on the issue, the importance of new legislation is also understood domestically as being the right path toward improving fighting crime.
Niv Elis contributed to this report.