Finance intel unit fail to fight crime, terror, funds go to waste - comptroller report

Eighty-seven percent of IMPA initiated reports passed on to police or other law enforcement bodies didn't lead to investigations being opened.

Shekel bills confiscated by Israel Police as part of the 'Black Billion' raid, February 8, 2023 (photo credit: ISRAEL POLICE)
Shekel bills confiscated by Israel Police as part of the 'Black Billion' raid, February 8, 2023
(photo credit: ISRAEL POLICE)

The Israel Money Laundering and Terror Financing Prohibition Authority (IMPA) is making few contributions to the fight against financial crime and terrorism, the State Comptroller’s Office indicated in a report made public Tuesday, as law enforcement didn’t use its reports which were plagued by accessibility and quality issues.

Eighty-seven percent of IMPA-initiated reports passed on to police or other law enforcement bodies didn’t lead to investigations being opened, which raised “concerns that the many resources invested in the authority go down the drain,” said the comptroller.

The lack of utility of these reports could arise from a general distrust of IMPA’s information, the quality of the documents, the relevancy of a crime to the right governmental body, or low severity of a suspected crime.

For files requested by other organizations, 29% of the time the documents didn’t contain relevant information to a case, and in 67%, the information didn’t lead to further developments or leads in investigations.

The comptroller reviewed 26 money laundering cases from 2020 and three terrorism financing cases from 2018-2021 that prosecutors were working on, “in order to examine the contribution of the authority to fight crime and terrorism.”

 New Israeli Shekel banknotes and coins are seen in this picture illustration taken November 9, 2021.  (credit: REUTERS/NIR ELIAS) New Israeli Shekel banknotes and coins are seen in this picture illustration taken November 9, 2021. (credit: REUTERS/NIR ELIAS)

A survey of the state attorneys found the authority made little to no contribution in the terrorism or the money laundering cases, the latter of which were worth NIS 124 million. On a scale of 0-5 for valuing the contribution of the authority in the 26 money laundering cases, 12 were rated zero and 19 estimated at one. In seven of the money laundering cases, the authority provided no documents. The comptroller did note that it should be clarified it wasn’t immediately clear if the lack of contribution was due to the conduct of the authority or the other government bodies.

Part of the lack of utilization and relevancy of IMPA’s information lay with severe communication issues with other authorities.

Twenty-nine percent of information requests were only answered in timeframes exceeding a month, according to the report. 80% of the Tax Authority’s requests were answered only after 30 days or more. The Tax Authority had told the comptroller that delays in information requests made it impossible to effectively use the information.

When information did reach other Israeli governmental bodies, there was no regulation to share the documents and reports in a coordinated fashion to multiple parties that the information might be relevant.

Communication with the public was also lacking, having been found “that the authority has no direct and dedicated communication channel for public reports on finance and terrorism and has no incentive plan to come forward with valuable information voluntarily,” said the comptroller’s report. “In contrast, there is a dedicated communication channel in the US as well as an incentive program.”

Delays partially responsible for lack of action

IMPA’s database of information on reports of ordinary and unusual financial activity was largely untouched by other organizations that are supposed to be using the resource. Many of the documents, though a great deal were found to have little intelligence, were marked as classified materials, which prevented access to the information.

IMPA emphasized that the audit was limited to “specific partial aspects of its work, and does not reflect in the entirety of the contribution by IMPA, which is very highly regarded both domestically and internationally.”

Between 2017-2021, IMPA received 500,013 reports on unusual financial activities suspected of illegality. Another 85,517 reports were received on 10.8 million ordinary financial activities. 24,278 of these unusual reports were used to create 5,381 documents. Most were sent to the police.

According to the comptroller, the processing of these reports suffered extreme delays, and sometimes weren’t addressed at all.

Twenty-seven percent of the reports were not entered into the database, and another 27% of reports were improperly entered, without required information.

Reports are supposed to be uploaded to the database within 48 work hours from the time of receipt, but the comptroller found that in 2017-2022 that 76% of reports were inputted 10 days or more later, and 44% of these being months later.

During the coronavirus pandemic, in 2020-2021, 50% of the reports were not entered into the database. A massive build up of reports led IMPA not to upload 230,000 reports in October 2021.

The Comptroller’s Office said that the reports given by IMPA on its activities didn’t reflect its actual operations, preventing the Knesset from giving proper oversight. The Justice Ministry also did not conduct regular monitoring and examination of the body’s operations, despite its vital purpose.

State Comptroller Matanyahu Englman said that proper operation of IMPA was the responsibility of the justice minister, the director-general of the justice minister and IMPA’s director. He called on them to take action to improve IMPA’s operations and cooperation between it and those that used its information databases.

“This is necessary to justify the imposition of the reporting system and its costs on the public, to contribute effectively to the investigative and security authorities, in particular in the war against organized crime, serious crime and terrorism financing,” said the report.

IMPA said that the comptroller did not find notable shortcomings in the vast majority of its operations.

“IMPA considers the recommendations very seriously, and began applying them already during the course of the audit, and even beforehand, undertaking the responsibility to attend to the findings,” said IMPA.