ISRAEL AMENDS TERRORIST FINANCE LAW TO INCLUDE

UNCLAS TEL AVIV 003585 SIPDIS SIPDIS E.O. 12958: N/A TAGS: PREL EFIN KTFN IS SUBJECT: ISRAEL AMENDS TERRORIST FINANCE LAW TO INCLUDE FOREIGN ENTITIES ¶1. SUMMARY: The Government of Israel (GOI) recently passed amendments to the Prohibition on Terrorist Financing Law allowing for the designation of foreign terrorist entities. Until this week, the GOI only designated "domestic" terrorist groups in the West Bank, Gaza, and surrounding countries. The GOI will likely add entities from the United Nations Security Council (UNSC) consolidated list and from the Treasury Office of Foreign Assets Control (OFAC) in the coming weeks. A recent assessment of Israel by MONEYVAL, an organization that ensures that states comply with international standards on money laundering and terrorist financing, served as the impetus for overcoming previous delays and passing the amendments. END SUMMARY. ¶2. On December 18, Econoff discussed amendments to Israel's Prohibition on Terrorist Financing Law with Osnat Davidson, General Counsel for the Counter-Terrorism Bureau of the National Security Council (NSC). The amendments, passed on December 17, authorize the addition of foreign entities to the GOI list of designated terrorist groups. The changes were delayed for several years because of procedural differences with commercial banks on how the information would be distributed. Davidson said the banks were deeply involved in the drafting of the revised law, according to which they will have three days after a designation is announced to enter it into their systems. Davidson explained that banks would be notified of new designations by fax and email, and that the names would be posted on the Ministry of Defense website. ¶3. The amendments determine that responsibility for preparing briefs on the adoption of foreign terrorist organizations rests with the NSC, which will submit a request for designation to a ministerial committee headed by the Prime Minister's Office. In order to adopt such a designation, the General Counsel's Office must meet the following criteria: 1) the terrorist group must appear formally on the watch-list of a foreign country; 2) that determination must have been in keeping with that nation's laws; 3) and it must meet the threshold of "reasonable to assume" that the information is accurate. Davidson explained that the "reasonable to assume" threshold allows the GOI to adopt designations from friendly countries without need for classified information -- all that is required is an open-source explanation of whey the entity was designated. The legal requirements for domestic terrorist groups (which includes all organizations in neighboring countries and the West Bank and Gaza) are considerably higher. ¶4. Davidson said that the GOI would likely begin by adding entities designated in the UNSC 1267 consolidated list of terrorist organizations. Under Israeli domestic law, there is no requirement for the government to abide by UNSCRs. It is therefore important that the GOI explicit incorporate the consolidated list under domestic law. The GOI will also be looking to incorporate foreign terrorist entities listed by OFAC. Davidson said her office would like to work in reverse chronological order, beginning with the OFAC designations of October 25. Davidson requested Econoff to contact her office if there are specific OFAC-designated entities that deserve urgent attention. Israeli banks already use the OFAC list voluntarily, but will now be legally obligated to enforce and report foreign terrorist transactions. ¶5. The Prohibition on Terrorist Financing Law was passed in 2005, and consolidates previous laws on domestic terrorism first approved under the British Mandate in 1945. Davidson noted that this law does not allow for the designation of individuals, although individuals designated by foreign governments can be cited under the current amendments. Davidson believes that the entire terrorist financing law will be overhauled within the next two years, and will eventually allow the GOI to designate individuals directly. ¶6. The GOI passed the amendments partially in response to a recent MONEYVAL assessment, which noted that Israel did not have a legal framework for designating foreign terrorist groups. According to Paul Landes, Legal Counsel at the Israel Money Laundering and Terror Financing Prohibition Authority (Israel's Financial Intelligence Unit),GOI officials are eager for Israel's financial system to gain recognition for being clean and well-regulated. The GOI has expressed the desire to one day join the Financial Action Task Force, in which MONEYVAL is an Associate Member. According to Landes and Davidson, the issue has the attention of the Prime Minister and the Head of Mossad, both of whom would like to see foreign terrorist entities designated as quickly as possible. ********************************************* ******************** Visit Embassy Tel Aviv's Classified Website: http://www.state.sgov.gov/p/nea/telaviv You can also access this site through the State Department's Classified SIPRNET website. ********************************************* ******************** JONES