The police do not have enough expertise in overseeing money changers, many of whom are affiliated with Israeli crime organizations, and most investigations involving money changers are probably best done by the Tax Authority, according to documents submitted to Attorney General Yehuda Weinstein.
Weinstein had asked for the recommendations of the relevant professionals as part of the work of a committee that was established last year at his behest to examine how to cope with organized crime’s involvement in this field.
Ever since it emerged that organized crime had benefited from the huge embezzlement at the Trade Bank that was revealed in 2002, the Israel Police understood that some money changers were serving as a pipeline for money laundering and transferring funds whose source was gray-market lending here and abroad. Some 2,200 money changers operate in Israel with an estimated turnover of 150 billion shekels ($38.8 billion), about a tenth of the banks’ activity. But the experts on the committee, which was headed by former deputy attorney general Avi Licht, found that these services are not sufficiently supervised, making it easy for criminals to control the flourishing industry.
In its recommendations to Weinstein, the panel called for the establishment of a dedicated regulatory office, broadening the regulation of this field and giving the regulator meaningful authority. It was also decided to hold discussions with the Finance Ministry, the Tax Authority and the police and to form a task force of all these enforcement agencies to begin tackling criminal activity in this area.
All these agencies submitted position papers that surveyed the current situation and recommended changes. As noted, the documents showed that the police are having a difficult time battling financial violations, with the Tax Authority complaining that the police actually slow down such investigations.
The Public Security Ministry, which monitored police activity against money changers suspected of criminal ties, noted that while the police has shown a significant change in attitude towards investigating such crimes, only 21 indictments have been served. The ministry said police officers lack the expertise to deal with economic crimes, and that it has only limited intelligence available about the involvement of criminals in money-changing services.
The ministry’s senior coordinator for policy and strategy, Kinneret Magen Elmaliah, suggested improving the police’s abilities to investigate financial crimes and gather intelligence, “with a stress on staffing these frameworks with people who have relevant academic and professional training.”
The Tax Authority’s position paper clearly stated that it felt most such investigations should be left solely in its hands, rather than forcing it to work with the police, because its financial teams were simply better than those of the police.
“The Tax Authority is a professional body that employs investigators with skills, an appropriate accounting orientation, and the ability to decode and sift through accounting documents. That’s why there is place and justification for giving it effective and significant enforcement authority in everything relating to money changers. If the committee’s conclusions do not give additional, significant authority to the Tax Authority in the cases it handles, the situation will remain as bleak as it is.”
Currently there are joint police-Tax Authority teams that work on financial crimes, but the authority notes that the police make the work drag on. “Today, investigations in which the Tax Authority is involved require the presence of the police, something that lengthens and complicates the investigations. The need to involve the police in all the investigations essentially turns every case into a special investigation of the police and the Tax Authority, without any justification.
“Setting up special investigation teams does not provide a solution for immediate enforcement, and without immediate handling many cases cannot be enforced,” the Tax Authority said. “Setting up special teams utilizes many people and resources both from the police and the Tax Authority, and cases appropriate for this type of investigation should be chosen carefully.”
The Israel Police refused to comment for this report.
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