The Israel Money Laundering Authority, the police and the Tax Authority opened a joint intelligence center at national police headquarters in Jerusalem last week to coordinate the fight against money-laundering and terrorism financing, the head of the money laundering authority, Yehuda Shaffer, said on Monday.
Shaffer was addressing a conference held by Tata Consultancy Services, a subsidiary of the Indian-based Tata conglomerate, which presented a system for managing financial data to be used in the efforts.
Shaffer said the new intelligence center would allow the law enforcement bodies to share information while safeguarding the privacy of clients of banks, insurance companies, investment managers and other institutions that are required to submit financial reports.
Shaffer said that of the 400,000 reports that the authority receives on routine financial transactions each year, 1.7 percent are forwarded to the police or the Shin Bet (Israel Security Agency). Of the 10,000 nonroutine transactions, 3.3% are reported to the enforcement authorities.
The Money Laundering Authority is an administrative body whose job it is to process information received from financial institutions. It is not an investigative body and transfers any suspicious material to the police or the Shin Bet.
The reports it passes on yield a few dozen court cases per year, which is all that the law enforcement system can handle, Shaffer said.
He added that the authority wants to bolster and standardize the reports that institutions such as the stock exchange, traders in precious stones and other financial institutions prepare so that they are as detailed as those provided by the banks. Shaffer said he hoped this would be done before November, when an international authority, Moneyval - the Committee of Experts on the Evaluation of Anti-Money Laundering Measures, is due to review Israel's fight against money-laundering to see if it meets international standards.
Meanwhile, the Israel Money Laundering Authority has prepared a bill to extend the obligation to submit financial reports to members of the diamond industry. The obligation to report will also be expanded to include transfers of NIS 5,000 and more involving the Palestinian Authority and countries classified as posing a threat to Israel.
In another lecture, Eitan Azani, deputy director-general of the Center for International Policy against Terrorism at the Interdisciplinary Center in Herzliya warned that Islamic fundamentalists have been developing new ways of transferring funds to terrorist organizations since the crackdown that began after 9/11.
Azani quoted the World Bank as declaring in 2004 that $80 billion had been transferred to terrorist groups worldwide through the hawalla system. The system, which was originally used to transfer money from foreign workers to their families back home, is based on trust and word of mouth.
An organization or individual who wants to transfer money to another country informs a money-man of his intention. The money-man then telephones or faxes a counterpart in the country of destination and tells him to transfer that sum from his own funds to the intended group or individual, who is identified only by code. In this system, there is no physical transfer of money and no record of the transaction.
Azani said, however, that the real threat of Islamic fundamentalism came from the cultural, educational, communal and religious facilities being built by radical Islamic charitable organizations across the world. He said the international community does not prohibit transfers of money for such purposes. However, it is these facilities that spread the word of fundamentalism and teach the younger generation of Muslims to be militant, Azani said.