Accounts in Israeli Banks Used for Terrorism, Central Bank Believes

But banking secrecy laws block transfer of information to Justice Ministry

The Bank of Israel has obtained information that several accounts held in Israeli banks may have been used to fund terrorist activities. However, because of banking secrecy laws, the central bank has not handed details over to the Justice Ministry. The central bank claims that it is the ministry's obligation to rectify the situation by legislating an amendment to the Banking Secrecy Law, so that it will be able to hand over the relevant information.

In October 2001, in the wake of the September 11 attacks on the United States, the Supervisor of Banks, Yitzhak Tal, ordered all banks in Israel to screen their customers' bank accounts and reports to him any account or financial activity of persons suspected of terrorist activity or connections with terrorists. The accounts were screened for persons and organizations appearing on a list published by U.S. authorities in accordance with a presidential decree issued shortly after the attacks.

After completing screening of the accounts at the end of 2001, the banks handed over their findings to Tal. Several suspicious accounts and financial transactions were found. The Bank of Israel has confirmed the existence of accounts believed to have been connected to the financing of terrorist operations but refused to state how many suspect accounts had been uncovered and to which terrorist organizations they were connected.

In the wake of the findings, the Supervisor of Banks informed the Justice Ministry that he was willing to hand over details of the suspect accounts and transactions discovered by the banks, but requested that the ministry first solve the legal impasse that prohibits him from violating banking secrecy laws.

The Bank of Israel would like a formula similar to the one adopted by the Prohibition of Money Laundering Law, which requires the banks and the Bank of Israel to report to the Anti Money Laundering Authority any suspected violations of the law.