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It is an open secret in the banking world. Monies deposited in various South American institutions is principally money that Jews have put away for a rainy day, said a banker on Friday.

And no, they had not paid dues on it: "Most of it is money upon which the depositors usually did not pay taxes in their country of origin. Their transfer to developed countries is conducted in underhanded ways. This is an open secret in the business," he said.

But the bankers argue that one should distinguish among types of illegal funds. In the case of Israel Discount Bank of New York, which agreed last month to pay $25 million to settle a Brazilian money-laundering case, the source of the funds was legal operations, though taxes had not been paid on them.

"No one claims that Israeli banks dealt in drugs or prostitution, even if in the process of conducting banking operations some payment or other was put in the wrong place," said a banker.

The bankers added that the money from South American Jews is transfered to Israeli banks in New York through money changers, not directly. The transfers are implemented through deposits the money transmitters conduct, which are hard to supervise, according to the bankers.

"They can do all kinds of things, like deposit additional amounts, and it's possible that other funds got mixed up with them," said the sources.

The bankers also add it's not their job to check whether taxes are paid for funds deposited into accounts they manage: it is the norm to give refuge to these funds.

If there are suspicions about the source of the funds, then the banker's job is to investigate the source. Israeli bankers do take on this task, according to the sources.