In September 2014, the Israeli Tax Authority published a Voluntary tax compliance protocol, which grants immunity from criminal prosecution on tax offenses, for applicants who reveal their concealed assets to the tax authorities, in return for paying civilian tax (hereinafter: “Voluntary disclosure procedure”).
We will clarify that the Voluntary disclosure procedure only grants immunity regarding tax offenses, and does not affect the obligation of financial institutes to uphold their duties under the Israeli Money laundering law 2000, and the directives that were issued under that law. Therefore, when funds are either deposited or transferred as a part of a Voluntary disclosure application, the financial institute is obligated to uphold all of the obligations imposed on it, including but not limited to: identifying the recipient of the service, identifying the beneficiary in the account, conduct an inquiry regarding the source of the funds and reporting to the Israeli Financial action task force on money laundering in appropriate cases, all in accordance with the financial risk management policy of that institute. The fact that it is a Voluntary disclosure, does not affect the obligation of the financial institute to verify the source of the funds, and to examine whether it’s an action that raises concern for money laundering or terror funding.
This document indicates a list of “Red Flags” regarding the Voluntary disclosure procedure. Those red flags are a useful tool, but the list does not constitute as an exhaustive list. Therefore, the list of red flags should be examined together with all of the additional existing information regarding the client. Those red flags are not necessarily constitutes as a cause for suspicion, and they do not include all of the symptoms that will require a thorough examination of actions.
These red flags are to be used as an operative tool, which will assist the evaluation of actions regarding terror financing or money laundering:
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