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The Banking Corporations Sanctions Committee decision regarding infringements by Bank Hapoalim Ltd of regulations under the Prohibition on Money Laundering Law
On December 30, 2010 the Banking Corporations Sanctions Committee regarding the prohibition on money laundering and the financing of terrorism decided to impose a financial sanction of NIS7.5 million on Bank Hapoalim Ltd (hereafter the bank) for infringing the banking directives issued by virtue of the power vested by the Prohibition on Money Laundering Law, 5760-2000 (hereafter the Law). The bank may appeal to a magistrates court against the committee's decisions within thirty days of receipt of the decision.
The major infringements and faults were based on the findings in the report of an inspection by the Banking Supervision Department in the Private International Banking Center of the bank (henceforth the Yarkon branch) in 2004, and on the findings in the report of an examination carried out in 200708 (henceforth the Examination Report).
As a result of the inspection relating to the Yarkon branch, a sanction of NIS 6 million was imposed. All the infringements derived from lack of reporting as required in Section 9 in the Prohibition on Money Laundering (the Banking Corporations Requirement regarding Identification, Reporting, and Record-Keeping to Prevent Money Laundering and the Financing of Terrorism) Order 57612001 (henceforth the Order), which refer to reporting unusual activity to the Israel Money Laundering Prohibition Authority (IMPA).
As a result of the examination performed in 200708 a sanction of NIS 1.5 million was imposed. The main infringements cited in the Inspection Report derived from inadequate preparation mainly in the following:
1.Failure to obtain or maintain declarations on beneficiaries in accounts.
2.Management of accounts for communal services and advocates accounts for their clients not in accordance with the requirements of the Order.
3.Failure to report unusual activities.
4.Failure to freeze accounts for which the customers identification particulars were not yet completed.
5.Late submission of reports to IMPA.
The bank took extensive steps to correct the above faults in the bank in general and the Yarkon branch specifically, and to prevent their recurrence.
With regard to the occurrences in Yarkon branch, the Committee emphasizes for the whole banking system the importance it attributes to the strict compliance with the directives and guidelines and to rigid and uncompromising adherence to the prevention on money laundering regime, and in particular to the centers that manage the accounts of customers who constitute risk focuses with regard to the prohibition on money laundering.
The Sanctions Committee of the banking corporations is a statutory committee set up under the Prohibition on Money Laundering Law, 57602000, which, as part of the means of enforcing the prohibition on money laundering and the financing of terrorism, is empowered to impose financial sanctions (fines) on banking corporations (up to NIS 2 million per infringement) for infringements of the law, or related orders or regulations. The Committee is headed by the outgoing Supervisor of Banks, Mr. Rony Hizkiyahu, and its members include the Director General of the Prohibition of Money Laundering and Financing of Terrorism Authority attorney Paul Landes, and the incoming Supervisor of Banks, Mr. David Zaken.