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Next Friday the Israeli banks were supposed to have reported, as is their legal duty, to the newborn anti-money laundering authority on the series of steps they have taken on the matter. But these reports have been delayed until February 15, because the authority won't be up and running until next month.

In the meantime, the banks have to contend with the spurious claims going round France of Israeli banks' involvement in a money-laundering scandal that is whipping up the French banking system.

To add to the claims, two French banks Credit Lyonnais and Soci?t? G?n?rale have posed a practical problem by refusing to accept checks from correspondent banks in Israel and from other countries on the blacklist of the Financial Action Task Force on Money Laundering (FATF).

Although some of the banks involved in the investigation are not major players, the fact that Israel appears on FATF's blacklist has brought it much criticism. For example, Israel has been described in the French press as a "paradise for launderers". Le Monde granted Tel Aviv the description of "a dubious financial center," in describing the city as a hub of tax fraud, and money laundering from the Mediterranean region, and particularly from the Russian mafia.

One cannot rule out that these reports may exaggerate or may even be tinged with anti-Semitism, but since the exposure of the Jewish bank accounts hidden during the Holocaust period, European financial institutions' sympathy for Israel and Jews has dimmed. And if there is an opportunity now to take a swipe back at Israel, there are some that do so with glee.

But this treatment is likely to sour the principle at stake and the need for a thorough reexamination of the links between Jews around the world and the Israeli banks' overseas outlets.

For many years these links were based on the need of Israeli banks for foreign residents' deposits as a source of foreign currency, and the opposing need of Jews spread throughout the Diaspora to make deposits with Israeli banks whom they trusted more than their local banks. In particular, this occurred in South America. These deposits of South American Jews finance most of the credit activities of the Israeli banks active in the U.S.

There are even sources that suggest that some of these finance sources are not completely kosher. The financial jungle in those places provides the Israeli representative offices with some cover, but the intensive international activity focused on money laundering in recent years has made this system of contacts quite untouchable. Those that deal in this jungle infect themselves.

To avoid the next imbroglio, the Israeli banks should reexamine their working procedures for their overseas branches, and try to block every step that takes them through this minefield.

At the same time, they should improve their control regulations which have been proved, particularly in Bank Leumi's case, as defective.