The Prohibition on Money Laundering Law was enacted on August 17, 2000 as part of the war against money laundering and for the prevention of actions originating in criminal activity. The Prohibition on Money Laundering Ordinance, which applies to banking corporations, was issued in January 2001 and became effective on February 17, 2002.
In order to combat money laundering attempts through the financial system, the Law requires providers of financial services - including banks - to obtain and verify identification of anyone seeking to open a bank account or to conduct transactions through the bank, and requires banks to report certain actions to an information repository at the Israel Money Laundering and Terror Financing Prohibition Authority, established for this purpose in the Ministry of Justice.
In accordance with sections 8(a) (6) (7) of the Prohibition on Money Laundering Ordinance (Obligations of Identification, Reporting and Record-Keeping of Banking Corporations for the Prevention of Money Laundering and Financing of Terrorism) - 2001 (hereinafter: “the Ordinance”), the Bank is required to report to Israel Money Laundering and Terror Financing Prohibition Authority. (hereinafter: “the qualified authority”) on the deposit of all checks drawn on a foreign financial institution and the payment of checks presented for collection by a foreign financial institution in an amount equal to at least NIS 1 million, and on the transfer from Israel to overseas or from overseas to Israel through an account of an amount equal to at least NIS 1 million. Such operations with financial institutions in a country or territory, which is defined by the Ordinance as a high risk country, will be reported to the qualified authority for an amount equal to at least NIS 5,000.
According to section 10(2) of the Ordinance, the Bank is exempt from reporting a transfer operation from Israel to overseas or from overseas to Israel if it was made with respect to the import and export of goods to Israel, except for operations with a high risk country or territory, provided that the bank has received documentation on the nature of the transaction, the identity of the counterparty to the transaction and the amount (bill of lading and invoice) or a declaration from the owner/s of the account regarding the nature of the transaction and its amount.
The Bank has an obligation to report to the qualified authority if it has not received the documentation or declaration as required by the date the account is credited or the funds transferred.
Payments and receipts in a transit transaction / goods in transit, documentation or various declarations have no significance, and the authority treats them like any payment/receipt in foreign currency that does not exempt the bank from reporting objectively.
For more information see the Bank of Israel website (this link leads to an external website, for which the bank is not responsible) and the Israel Money Laundering and Terror Financing Prohibition Authority website (this link leads to an external website, for which the bank is not responsible).