-Caveat Lector- http://www.haaretzdaily.com/hasen/pages/ShArt.jhtml?itemNo=243849&contrassID=2 &subContrassID=1&sbSubContrassID=0
w w w . h a a r e t z d a i l y . c o m Terrorist funds flow through Israeli banks As Israel conducts intensive campaigns against the flow of "terrorist funds" to the Palestinian Authority from Europe and the United States, it has gradually become clear that the Israeli banking system is full of holes through which money flows for the very same purposes. Two weeks ago, Ma'ariv ran an investigative report about former Shin Bet security service official Yossi Ginossar and his web of business relations with the PA. Now, senior defense officials say there is concern that tens of millions of dollars are being transferred to the PA - and used for terrorist purposes - through Israeli banks. Israeli banks serve as a "blind channel," the sources say, meaning there is no significant monitoring of bank transfers. The international division of the IDF's Judge Advocate- General's office recently completed a comprehensive report on the issue that has been disseminated to senior officials in the defense establishment. Ha'aretz has also acquired a copy of the report. The Shin Bet and the prime minister's counter-terrorism staff believe that huge amounts of money are moving through the loopholes in the system. Now Israel is looking for ways to block those loopholes, with legislation being prepared in the Justice Ministry. Defense sources said the findings keep them awake at night and that any delay in solving the problem constitutes genuine negligence. According to both the JAG memo and assessments by other officials, Israeli banks are conducting activities that contravene international rules aimed at preventing financing for terror groups. The entire Palestinian banking system is dependent on the Israeli system, having no currency or central bank of its own. Palestinian banks get money transferred through Israeli banks in two ways: cash delivered by couriers and electronic transfers. The problem lies in the system of correspondent banks. A correspondent Israeli bank provides services to the Palestinian bank in fields where the latter does not operate; it also provides services that the Palestinian bank cannot provide, serving as a kind of intermediary through which money from the West can go directly into Palestinian banks. But the Israeli bank does not know whom the Palestinian bank is working for or the purpose of the activity. The problem is compounded because the PA does not have a monitoring apparatus to prevent money laundering, does not require identification of customers or reports regarding suspicious activity and does not act to prevent terrorist groups. Thus the Israeli bank, as a "blind middleman," transfers money from Western banks, which can claim that they are not involved in transferring money to terror groups. Some steps have been taken internationally to block the transfer of terrorist funding and illegal capital through correspondent banking systems. A Basel convention, which includes all the central banks in the world, set new international standards last year for banks to be fully informed by their correspondent banks about customers using the service. Two years ago, a U.S. Senate committee recommended prohibiting American banks from opening correspondent bank relationships with "suspected" foreign banks operating in countries that do not cooperate in the war on money laundering. The Patriot Act, passed in the wake of the September 11, 2001 terror attacks in the U.S., allowed American law enforcement agencies to demand clarifications and identifying details from the banks to which they provide such services. Israel, in an effort to line up with the new American and international standards, decided last September that an Israeli bank providing correspondent services must be familiar with the nature of the foreign bank (in this case, the Palestinian one) receiving the services and must not conduct financial relations with banking institutions that do not operate according to anti-money laundering rules. However, the new standards only go into effect in September 2003. Israel is currently considering stopgap measures that could be used until then. The problem is that if the new standards are fully and immediately implemented, they would prevent any transfer of funding from Israeli banks to Palestinian ones - including perfectly legal transfers - since none of the PA banks can currently meet the new international standards. Meanwhile, the defense establishment is also considering recommending a law that would require Israeli banks to alert the authorities of any financial transactions involving Palestinian institutions that could be channels for terrorist funding. The authorities would also have the power to freeze such banking activity if suspicions of terrorist financing arose. The discussions about the language of such a law have already begun in the Justice Ministry. By Amos Harel /hasen/objects/pages/PrintArticleEn.jhtml?itemNo=243849 close window <A HREF="http://www.ctrl.org/";>www.ctrl.org</A> DECLARATION & DISCLAIMER ========== CTRL is a discussion & informational exchange list. Proselytizing propagandic screeds are unwelcomed. Substance—not soap-boxing—please! These are sordid matters and 'conspiracy theory'—with its many half-truths, mis- directions and outright frauds—is used politically by different groups with major and minor effects spread throughout the spectrum of time and thought. 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