Israel's Anti-Money Laundering Campaign Suffers Another Blow

by Robert Lee, Tax-News.com, London

13 November 2001

The official in charge of the establishment of a new anti-money laundering authority in Israel has resigned, in a move which many fear may jeopardise the nation's chances of removal from the FATF blacklist next year.

Lior Horev resigned last week after it was revealed that despite having worked on the development of the new agency for the past year, he is not under consideration to head it when the body becomes fully operational in February 2002.

Although improved anti-money laundering legislation was passed in August 2000, it is thought that the absence of an enforcing agency was the principal reason for Israel's continued inclusion on the FATF blacklist. However, the establishment of the new authority has not been easy, and Mr Horev's supporters feel that far from receiving the support of the establishment, he was forced to fight against it a great deal of the time.

The authority, which will operate under the auspices of the Justice Ministry, will work closely with all of Israel's financial institutions, which from February 2002 will be obliged to report all cross-border transactions of NIS 80,000 ($18,894) or over. However, the Justice Department was reportedly reluctant to grant Mr Horev autonomy, and a six month delay in the issuing of the agency's $1 million budget has meant that far from a 20 strong unit readying itself for the February deadline, a lone secretary is currently employed by the anti-money laundering authority.

Sources close to the displaced and disgruntled Lior Horev have condemned the fact that he was passed over for the position, telling the Jerusalem Post that: 'He wanted to establish a real authority to combat money laundering and work for the interest of the state of Israel being a part of the rest of the world,' and predicting darkly that 'there is no chance of Israel coming off the blacklist now.'

However, spokesman for the Justice Ministry, Jacob Galenti disagrees, and was quoted last week as saying that the authority was in its final stage of readiness, with a number of important tenders already in place, and the hiring of staff and implementation of a computer system imminent. He told journalists that he is 'very optimistic' that Israel will be removed from the FATF's list of unco-operative countries in February.

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