Adv. Roi Azdar, Adv. Gill Nadel
According to the Money Laundering Prohibition Law, and the Prohibition on Money Laundering Ordinances (Methods of Reporting Monies Entering and Leaving Israel) 5761-2001, it is mandatory to report the flow of money in and out of Israel.
The sum which must be reported is 90,000 NIS or more, for anyone entering or leaving Israel carrying money. The term "money", for our purposes, includes: cash, bank checks, and traveler's checks.
For a new immigrant according to the "Immigrant Certificate" under the Law of Return, when first entering Israel , the sum that he or she must report is 1,125,000 NIS or more.
The report is to be made by filling out customs form 84- "Report of Money Entering or Leaving", which is available at the customs official or the Tax Authority’s website.
When the money is brought in or out as personal luggage, the traveler must fill out a reporting form and hand it to the customs official at the gate entrance to Israel . In cases where there is no custom post at any of the exits, the traveler must fill out a form and hand it to the custom’s official at the entrance to Israel. Also, if at the entrance there are two channels (one red and one green) the traveler must approach the custom’s official at the red channel, fill in the reporting form and hand it to the official.
When the money is passed through via mail or any other means of shipment, one must hand the form to the custom’s official present where the mail is sent/ received. At the absence of such an official, the form is to be sent by registered mail with a verification of receipt, to the Customs' Money Laundering National Center. (When money enters Israel this must be done within 72 hours from the time when the shipment is received, and when money leaves Israel, before the date on which the money left the possession of the sender).
Violating the duty of report, bears a sentence of six months or a fine as set in paragraph 61(a)(4) to the Penal Code (as of today: 226,000 NIS), or ten times the sum of the unreported currency, whichever is higher. In addition, the law authorizes police officers and customs officials to seize any money exceeding the sum exempt from report, and has authorized the Customs Manager to set a sanctioning committee when such a violation occurs.
It should be noted, the question of whether the unreported money was owned by the party liable in reporting makes no difference at all. So was ruled in a case in which three friends entered Israel with a certain sum that they claimed was owed by all three of them but for reasons of convenience all three left their money in the possession of one- the appellant (who was caught with the unreported money) and he alone was held liable and sanctioned for the unreported sum found in his possession. The court rejected his claim that the money was not his and that the portion of the money that was to be his after division would have amounted to less than the sum the law requires to report.
Paragraph 15(a) to the law states that financial sanctions can be levied at a sum no more than half the fine set in paragraph 61(a)(4) to the Penal Code or five times the amount of the unreported sum- whichever is higher. The Prohibition of Money Laundering Ordinances (Financial Sanctions) 5762-2001 (henceforth "the ordinances") set the processes for levying the financial sanctions and how high they should be, including the next factors (among other factors) that influence the committee’s decision regarding the extent of the financial sanctions-(1) whether the violation was a first offense; (2) whether the violation was a repeat offense; (3) the financial extent of the violation. This is, as mentioned, an open list of considerations, with the courts ruling that source of the money is also a legitimate criterion for the committee to consider on this subject.
This means that, the authorities have alternative, parallel ways to deal with violations of the rules concerning entering or exiting money from the country- they can criminally try the violator under paragraph 10 of the law, or try him before the Sanctions Committee under paragraph 12 of the law, and if a person committed an action with the intention of not reporting to the Authority on the transfer, he may also be tried under paragraph 3(b) of the law.
The law clearly states that if financial sanctions are levied against a person and he pays them, no indictment will be filed for the violation for which the sanctions were levied.
According to the courts’ decision, violation of the duty to report leads to the sanctions stated in the law, and as described above, apply on all, whether the source of the unreported money “kosher” or not, or forbidden in the language of the law.
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