Knesset lowers Gaza cash reporting requirements

The Constitution, Law and Justice Committee on Tuesday unanimously agreed to lower the reporting requirements for physical transfers of cash from Israel to Gaza from NIS 100,000 to NIS 12,000.

The decision was made in order to crack down on money laundering; the reporting requirement for cash transfers between Israel and most other international locations remains NIS 100,000.

The change was made by amending the order applicable to defending against money laundering, meaning only the Law Committee needed to approve it. The Knesset as a whole must approve new laws, but amending orders – as in this case – which have a lower legal status, can often be done by mere approval of the relevant committee and ministers.

Finance Minister Yuval Steinitz approved the amended order after consultation with Justice Minister Yaakov Neeman and Public Security Minister Yitzhak Aharonovitch, making the Law Committee’s approval the last necessary step.

The change was originally requested in August 2011 by Shin Bet (Israel Security Agency) head Yoram Cohen, who requested that Steinitz extend the reporting requirements to much smaller amount of cash transfers.

The new cut-off level for reporting requirements will now be identical to the stricter level until now only in force for transfers of cash between Israel and the West Bank. Whereas the Gaza crossing has been governed by a 2000 money-laundering law that applies to most international crossings, the West Bank has been governed by a special 2003 military order issued by the IDF commander with responsibility for the West Bank.

In his letter to Steinitz, Cohen said that the stricter requirements would “serve Israel’s security needs.” He added that, according to intelligence, those crossing between Israel and Gaza are “legally transferring large amounts of funds, without oversight,” by making many transfers, but keeping each one under the current NIS 100,000 level.

“These funds are used, for among other things, strengthening terrorist organizations,” he said.

A Shin Bet representative at the Knesset hearing said that sometimes terrorists are transferring funds for themselves under the guise of humanitarian aid, but are not being checked since they make sure the individual transfers stay below the current cut-off level for reporting.

Sari Bashi, director of the Legal Center for Freedom of Movement, said that she hoped the new “reporting requirements would not be used to restrict the ability of merchants to do legitimate business.”

She stated that for the past few years “Israel has forbade many financial transactions via banks with Gaza, making it very difficult to purchase goods from Israel and the West Bank, to pay salaries and to run a legitimate economy.”

As a result, she said that the “ability to transfer cash is necessary for ordinary commercial transactions” to be able to occur.

Bashi said there was “nothing wrong with asking merchants to report the cash they are carrying as long as they can use the cash for legitimate business purposes.” She added that her understanding was that most of the money going to terrorists was “coming through the tunnels and not through the Erez Crossing,” which this legislation was addressing, and hoped that the authorities would be “sensitive in their enforcement” of the new policy.