The Tel Aviv Magistrate’s Court has issued a precedent-setting decision,
convicting the founder of a financial services firm of a money laundering crime
for what had previously been considered only disciplinary misconduct, the courts
announced Saturday night.
The decision itself was issued on
Thursday.
The executive, Benzion Luze, was also sentenced to criminal
sanctions, including a suspended sentence of six months in prison, a NIS 50,000
fine and the transfer of NIS 200,000 to the forfeiture authority.
The
conviction came following a plea bargain by Luze.
The charges that Luze
was convicted of included violating a lawful order under the Criminal Penalties
Law, the Money Laundering Law and a money laundering regulation requiring
oversight, reporting and verification of client information regarding currency
exchange services.
Under Israeli law, currency exchange services can
cover a wide variety of transactions.
The Money Laundering Law also
covers a variety of criminal activity, including activities that the public
might not always think of as criminal.
The conviction was based on Luze’s
conduct in running the company Amit Liam Trade and Holdings from January 2008 to
March 2010.
During that time, Amit Liam would receive problematic checks
from clients and in return would give the clients funds or Amit Liam checks
matching the check amounts.
The clients generally came to Amit Liam as
they needed funds immediately to pay off debts and would also pay a fee to Amit
Liam for its service.
Luze’s unlawful activities involved at least 466
transactions and NIS 17 million in which he, among other things, failed to
verify the identities of his clients according to the relevant heightened
standard for these which receive extra scrutiny.
Normally the registrar
for currency exchange services merely decides disciplinary sanctions against
offenders, which consist of only fines and similar economic
sanctions.
For example, in this case, prior to the criminal proceeding,
Amit Liam was fined NIS 120,000 by the currency registrar.
However, the
state has decided to up the ante for offenders now that the use of currency
exchange transactions has exploded.
With the increase in these
activities, the state decided it is important to signal to offenders that the
consequences of breaking the rules will not be merely disciplinary and economic
against the company, but criminal charges against the individuals
responsible.
Still, the court’s actual sentence for Luze was relatively
light under the conditions of the new legal regime’s criminal
sanctions.
The court explained this outcome as a transitional result in
the move toward criminal sanctions for offenders.
Although the court did
want to send a strong message to offenders, it did not feel that it could
penalize an offender in the first such case to the full extent of the
law.
The court said that this approach was consistent with precedent
applying to sentencing offenders of newly passed or applied laws.
Luze
also pled for leniency in light of a clean record, his claim that most of the
crimes were due to misunderstanding the rules and his status as a married father
of three.