U.S. TREASURY RECEIVES GOI BRIEF ON MONEY

S E C R E T SECTION 01 OF 02 TEL AVIV 004145

SIPDIS

E.O. 12958: DECL: 06/30/2015
TAGS: PREL PTER EFIN COUNTERTERRORISM
SUBJECT: U.S. TREASURY RECEIVES GOI BRIEF ON MONEY
LAUNDERING AND TERROR FINANCE

REF: A. TEL AVIV 1637

B. TEL AVIV 3223

Classified By: Ambassador Daniel C. Kurtzer for reasons 1.4 (b) and (d)
.


1. (C) SUMMARY: Israeli officials briefed U.S. Treasury
advisor Szubin and Econoff on GOI efforts against money
laundering and terror finance. The police officials cited
successes in fighting money launderers, seizing millions of
dollars, but also noted difficulties in cooperation and
information sharing between the police and the Israel Money
Laundering Prohibition Authority (IMPA),which monitors
financial institutions. At the Ministry of Justice, IMPA
officials responsible for fighting money laundering gave a
presentation on the overall structure and mission of their
organization and how this organization turns raw financial
data into intelligence to combat money laundering. At the
MFA, counterterrorism officials talked about GOI lobbying
efforts in European capitals to have Hizbollah designated a
terrorist organization and to seek greater cooperation with
the Europeans against Islamic charities involved in funding
terror groups. END SUMMARY.

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Israel National Police
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2. (C) On June 28, Adam Szubin, senior advisor in the Office
of Terrorism and Financial Intelligence in the Department of
Treasury accompanied by Econoff, met with Israel National
Police (INP) officials Yehuda Twersky and On Tobi from the
Special Operations Department (SOD) to discuss INP efforts in
combating money laundering and organized crime. Twersky told
Szubin that the SOD falls under the intelligence branch which
deals mainly in collecting information allowing law
enforcement officials to go after individuals who break the
law. Twersky said efforts to fight money laundering have
been successful, citing the March 2005 case against Bank
Hapoalim (Ref A) and other ongoing cases. He touted the
recent seizure of NIS 35 million against Bank Hapoalim
clients. In Hapoalim and other cases, Twersky noted that the
most promising strategies involved pursuing financial
institutions for failure to comply with reporting
requirements.


3. (S) With respect to IMPA, Twersky said that the INP has
relied more on its own investigative techniques, primarily
human intelligence, to uncover money laundering offenses. He
touched on sentencing against those involved in money
laundering, indicating that Israeli sentences do not mirror
sentencing patterns in the U.S. which are much more stringent
(Ref B). He next talked about allocation of assets forfeited
from money-laundering offenses, which are divided among the
Ministry of Justice, the INP and the prosecutor's office. He
said law enforcement authorities focus on going after the
institutions rather then individuals, and this "sets the
example."


4. (S) Twersky shifted his focus to the IMPA, which collects
information from financial institutions in order to locate
suspicious or "irregular" account activities. He said the
working dynamics between the INP and the IMPA are not very
productive. There is a question of the added value that IMPA
brings to the overall law enforcement picture. The IMPA does
not have any law enforcement capabilities and provides only
researched data and analysis. Twersky also cited conflicts
between IMPA's pursuit of administration fines against
targets and criminal and civil forfeiture.

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Israel Money Laundering Prohibition Authority
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5. (C) On June 29, Szubin and Econoff met with IMPA
officials, Zefanya Barzilay and Gil Bareket. These officials
gave a brief on the mission and structure of the IMPA, which
is the Israeli Financial Intelligence Unit (FIU). The IMPA
mission is to support law enforcement investigative efforts
and foster inter-agency and global cooperation against
domestic and international money laundering and terror
finance related crimes. The GOI law which provides the
mandate for fighting money-laundering is called the
Prohibition on Money Laundering Law (PMLL),5760-2000.


6. (S) The IMPA provides case support information to
requesting customers. It functions by receiving data from
banks, insurance companies, portfolio managers, stock
brokers, currency service providers, customs, Internal
Revenue Service (IRS) and others dealing with financial
transactions. It processes this information and provides
intelligence to the Israel tax authorities, the INP, and
other foreign FIU's. Flow of information and data collection
is methodical, said Bareket. Financial institutions also
have obligatory periodic and random reporting requirements to
the IMPA, said Bareket, which eases the collection process.


7. (S) The IMPA officials also touched on the administrative
aspects of their organization. Barzilay discussed the
"filtering system, in which IMPA passes along only those
investigated reports that warrant further investigation."
This system provides a balance between privacy and the need
to effectively combat money-laundering and terror finance.
The IMPA disseminates valuable information to law enforcement
authorities to add significant value to potential
investigations. This system also promotes a "climate of
trust" between financial institutions and the IMPA.


8. (C) The brief also covered the IMPA, leadership, general
staff and departments. The IMPA organization consists of a
general director with two senior assistants. The legal and
information technology offices are under the senior
administrative assistant. The collection, research and
control offices fall under the general director's primary
assistant. At the lower echelon, there are 23 employees, 15
to 30 outside technical experts and a fulltime technology and
intelligence consultant. These officials are professionals,
experienced in the area's of investigation, intelligence,
economics, criminal justice, and accounting. There are four
departments: collection and compliance, research and
analysis, legal office, and information, technology and
communication.


9. (S) In the information technology section, the system is
currently undergoing upgrades, which will refine the
collection and processing of raw data. One feature of this
upgrade is an on-line "real time" secure collection system.
This will provide the GOI officials the most recent picture
of account activity. Another upgrade feature is a secure
gateway to the INP, and the securities administration. A
comprehensive analysts' workbook and research toolbox and a
multi-lingual free text search with Data Analysis and
Contextual Processing is also part of the information
technology upgrade.


10. (C) There are also legal tools in the combat against
money-laundering, and terror finance. The Prohibition on
Money Laundering Law (PMLL),which was passed on August of
2000, Combating Criminal Organization Law (CCOL),and the
Prohibition on Financing of Terror Law (PFTL),which was
passed on January of 2005, gave GOI authorities power to
execute their duties.

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Ministry of Foreign Affairs
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11. (S) Szubin accompanied by Econoff met with Ministry of
Foreign Affairs Head of the Counterterrorism Department
Yehuda Yaakov, and MFA official Benny Sharoni. Yaakov said
Islamic charities in Europe remain a major concern for the
GOI, citing CBSP, Interpal, the Union of the Good and others
who provide financial support for terror groups such as Hamas
and Hizbollah. Yaakov told Szubin he noted a more positive
attitude of "transparency" in recent meetings with French
counterparts, and would continue to press requests regarding
cooperation against Islamic charities who have links to
terror finance. He said this was a "surprising step" in the
historical relationship between the two countries, which has
not been rosy. He also noted some operational difficulties
experienced by CBSP and Interpal, although he did not know
why.


12. (S) Yaakov said the GOI is also pushing for European
nations to take legal measures against those who use
incitement in support of terrorism. He also expressed
concerns about the use of the internet by terrorists and
their supporters. Finally, he said that further thought by
the GOI was required to respond both tactically and
strategically to recent developments in which both Hamas and
Hizbollah are entering the political stage more forcefully.


13. (U) This cable was cleared by Treasury Advisor Szubin.

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